ISLAMABAD: The Federal Board of Revenue’s (FBR) decision to block the mobile phone SIMs of non-filers has generated a new controversy as the telecom regulator is reluctant to comply with the directives amid pressure from the telcos.

The FBR has forwarded a list of 506,671 individuals to the Pakistan Telecommunication Authority (PTA) for blocking their mobile phone SIMs as they did not file their returns for the tax year 2023.

While the PTA or the Ministry of IT and Telecom did not respond, a source in the sector told Dawn that the telecom regulator has already forwarded the list to the four cellular mobile operators (CMOs).

Meanwhile, the PTCL has issued a response stating that the company was closely monitoring the recent directives from FBR regarding blocking SIMs linked to around 0.5 million CNICs related to non-tax filers.

“This matter is of utmost importance to us, and we are diligently examining this order within the applicable legal and regulatory framework,” a PTCL spokesperson said, adding, “Our priority is to ensure compliance with the applicable legal provisions while safeguarding the interests of the concerned consumers.”

At the same time, PTCL, the parent company of Ufone, added that it was in close coordination with PTA to address this issue effectively and responsibly.

Though there was no statement from Jazz, Zong, or Telenor in this regard, a senior executive of one of the telcos said that the FBR was only trying to hide its own failures and that instead of giving absolute powers to their Commissioner, the tax collecting body has to concentrate on expanding the tax base.

“Not only the consumers have the right, but even the telcos can approach the courts against the FBR’s decision,” the executive added. The FBR’s decision was made through the Income Tax General Order (ITGO) 01/2024, which was issued under 114B of the Income Tax Ordinance 2001.

The new section 114B, added in the Income Tax Ordinance 2001, is included in the Finance Act 2022, which grants the FBR the power to enforce the filing of returns. Section 114B states that the “Board shall have the powers to issue income tax general order in respect of persons who are not appearing on active taxpayers’ list but are liable to file a return under the ordinance’s provisions.” As stated in the law, the FBR can issue an ‘income tax general order’ to disable mobile phones or mobile phone SIMS, discontinue electricity connections, or discontinue gas connections.

Notices to non-filers

At the same time, one senior official of a telco said that sub-section (4) of section 114B also states that no person can be included in the general order unless the notice has been issued, and the FBR should serve the notices to the non-filers before issuing directives to the PTA or the mobile service providers.

The official referred to the provision in the law that allows Commissioner Inland Revenue to restore mobile phone SIMs and electricity and gas connections in cases where the commissioner was satisfied that the return has been filed or the person is not liable to file a return under the Income Tax Ordinance and added that there has to be some degree of checks at the FBR officials too.

Published in Dawn, May 2nd, 2024