In a Universal Service Fund tax ruling dated October 20, the Supreme Court of Pakistan set aside a tax liability of about Rs4.79 billion. The court held that payments the fund made to telecom companies for services in underserved areas were not subject to withholding under the country's income tax law. The fund had appealed, and its appeal was allowed.
What the court decided
The Income Tax Ordinance is the main law governing income tax in Pakistan. The bench found that the payments fell outside the withholding rule in clause 153(2)(b) of that law, and that a separate provision, Section 21(c), did not apply to them. The 38-page judgment also annulled the relevant part of a revised assessment issued by tax authorities, along with a decision of the Alternative Dispute Resolution Committee, a body that tries to settle tax disputes before they reach the courts.
The three-judge bench that decided the case was made up of Justices Munib Akhtar, Jamal Khan Mandokhail and Irfan Saadat Khan.
The figures in the case
The dispute concerned payments of roughly Rs17.76 billion that the fund made to telecom firms for projects meant to bring phone and internet facilities to places where such services were missing or inadequate. The Alternative Dispute Resolution Committee had reduced the tax liability to about Rs1.53 billion. Because the Supreme Court also annulled that committee's decision, the lower figure does not stand either. The court's finding is that the payments were outside the provisions the tax authorities had relied on.
Who is involved
The Universal Service Fund brought the appeal, and telecom companies received the payments for work in underserved areas. Tax authorities issued the revised assessment that the court has now partly struck down. The Universal Service Fund tax ruling therefore favours the fund, which brought the appeal.
Aasan alfaaz mein
Supreme Court ne Universal Service Fund ki telecom companies ko adaigiyon par Rs4.79 arab ka tax liability mansookh kar diya hai. Yeh fund un ilaqon mein services ke liye hai jahan phone aur internet ki suvidha kam ya bilkul nahi. Is faisle ka seedha asar aam shehri ke bill ya qeemat par nahi bataya gaya, lekin yeh tax mamle mein ek ahem mor hai.
