Govt barred from blocking mobile SIMs of over 500,000 non-filers

The Islamabad High Court (IHC) on Tuesday stopped the federal government from blocking mobile phone SIM cards of individuals who failed to file their tax returns for the 2023 fiscal year, under the Income Tax General Order (ITGO).

The decision came on the petition of a telecom company seeking the government's move halted.

Chief Justice IHC Justice Aamer Farooq directed the government to stop the decision till May 27.

Last month, it was reported that the Federal Board of Revenue will write telecos to block the SIMs of over 500,000 non-filers in order to combat tax evasion.

Later, a disagreement between telecom companies and the tax body emerged over the decision.

The telecom companies had expressed reservations regarding the FBR's ITGO, citing their obligation to provide uninterrupted service to customers, with exceptions only in specific circumstances as per the Telecom Act. However, the matter was later resolved by consensus.

It was decided between the parties to block 5,000 sims on a daily basis and the tax regulatory body had already sent a list of tax-evaders to the telecom operators.

On the other hand, FBR decided to impose a hefty 90% withholding tax on mobile phone top-ups for more than 570,000 non-filers.

These individuals will pay a 90% instead of 2.5% additional withholding tax until they submit their income tax returns.

An automated system will deduct the 90% tax from any top-up made by a non-filer, prepaid or postpaid. For example, a Rs100 top-up would result in only Rs10 being credited to the phone balance, with the remaining Rs90 going to the tax body.