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The Supreme Court of Pakistan has quashed a Rs. 4.79 billion tax demand against the Universal Service Fund (USF), ruling that payments made to telecom operators for expanding connectivity in underserved areas are not subject to tax deduction under Section 153(2)(b) of the Income Tax Ordinance.
The decision marks a significant legal victory for USF, which plays a key role in extending broadband and telecommunication services to remote and underserved regions of Pakistan.
According to official USF sources, the Fund presented detailed facts, supporting evidence, and legal arguments during the proceedings to establish its position regarding the tax treatment of payments made to telecom companies.
After considering the case, the Supreme Court ruled in favour of USF and annulled the tax order issued by the revenue authorities.
The judgment provides clarity on the application of the relevant tax provision to USF payments made to telecom operators for connectivity projects in underserved areas.
What Does the Supreme Court’s Decision Mean for Digital Connectivity?
The ruling is particularly important for USF’s ongoing efforts to improve telecom infrastructure in areas where commercial operators may find network deployment financially challenging.
USF supports projects aimed at extending mobile coverage, broadband connectivity, and digital infrastructure to communities that remain outside reliable telecommunication networks.
With the Rs. 4.79 billion tax demand set aside, the Fund intends to focus on accelerating network deployment activities across unserved and underserved regions.
According to USF sources, the judgment represents an important milestone toward achieving the government’s Digital Pakistan and Digital Nation objectives.
The Fund reiterated its commitment to improving access to high-speed broadband and telecom services in remote parts of the country, where connectivity remains essential for education, business opportunities, and access to digital services.
USF also acknowledged the support of the Ministry of Information Technology and Telecommunication (MoITT) and the Pakistan Telecommunication Authority (PTA) throughout the legal proceedings.
The decision removes a significant tax dispute for USF and could provide greater certainty for its connectivity initiatives. However, the pace of future network expansion will continue to depend on project approvals, available funding, and implementation by telecom operators.
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