Key Takeaways
- The Supreme Court has overturned a tax ruling against the Universal Service Fund (USF).
- The court ruled that USF was not required to deduct tax under Section 153(2)(b) of the Income Tax Ordinance, 2001.
- The decision resolves a tax dispute and allows USF to continue expanding digital connectivity in remote areas.
The Supreme Court of Pakistan has quashed a Rs. 4.79 billion tax demand levied against the Universal Service Fund (USF), ruling that the body was not required to deduct tax under Section 153(2)(b) of the Income Tax Ordinance, 2001.
The case, which involved a tax demand linked to payments made to telecommunications companies for projects serving underserved areas, was initially challenged by the USF before the Commissioner of Appeals on February 29, 2024.
Following changes to the dispute resolution process under the 2024 legislation, the matter was referred to the Alternate Dispute Resolution Committee, which ruled on March 21, 2025, that USF was required to make the deductions.
USF subsequently challenged this decision, leading to the Supreme Court's ruling, which overturned the lower court's decision and set aside the tax order.
According to USF sources, the fund presented its legal position and supporting evidence before the Supreme Court, which ruled in its favor. The ruling resolves the tax dispute in USF's favor, allowing it to continue its work to expand broadband access and telecommunications infrastructure in remote areas.
USF thanked the Ministry of Information Technology and Telecommunication and the Pakistan Telecommunication Authority for their support during the legal proceedings. The fund stated that it would continue focusing on expanding digital connectivity across Pakistan.
The decision is significant as it ensures that USF can continue its crucial work in extending telecommunications services to unserved and underserved areas, thereby enhancing digital connectivity in remote regions of the country.
The ruling resolves the tax dispute in the fund’s favor, allowing it to continue its work to expand digital connectivity across Pakistan.
USF sources, Universal Service Fund
