Does taking card payments or having a 1,000 square foot shop still make me a Tier-1 retailer?

Neither test survives in the law as amended to 30 June 2026. Having a bank card terminal, or a shop of 1,000 square feet or more, used to be enough to make a retailer Tier-1 under section 2(43A) of the Sales Tax Act, 1990. Both limbs have been omitted, the floor-area test in 2023 and the card-machine test in 2026.

What does the law say?

Section 2(43A) defines a Tier-1 retailer as a retailer “falling in any one or more of the following categories”. The list has changed several times. Here is what happened to the tests people most often ask about:

Old limb	What it covered (in plain words)	What happened
(e)	A retailer whose shop measured 1,000 square feet or more, or 2,000 square feet or more for a furniture retailer	Omitted by section 5 of the Finance Act, 2023
(ga)	Jewellery sellers, excluding shops of 300 square feet or less	Omitted by section 5 of the Finance Act, 2023
(f)	A retailer who acquired a point of sale for accepting debit or credit card payments from a bank or a digital payment provider authorised by the State Bank of Pakistan	Omitted by section 4 of the Finance Act, 2026
(g)	A retailer whose deductible advance income tax on purchases from suppliers over twelve months exceeded a threshold notified by the Board	Omitted by section 4 of the Finance Act, 2026

Section 4 of the Finance Act, 2026 is short on this point: in clause (43A), “sub-clauses (f) and (g) shall be omitted”. Section 1 of that Act brings it into force on 1 July 2026, unless otherwise provided. The consolidated Sales Tax Act to 30 June 2026 prints those sub-clauses as omitted, with footnotes naming the Finance Act, 2026.

What still makes a shop Tier-1?

After these changes, section 2(43A) keeps these limbs:

1. (a) a unit of a national or international chain of stores;
2. (b) a shop in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
3. (c) cumulative electricity bills above Rs. 1,200,000 in the immediately preceding twelve consecutive months;
4. (d) a wholesaler-cum-retailer with turnover of more than Rs. 200 million engaged in bulk import and supply of consumer goods to retailers and to the general public;
5. (gb) turnover above Rs. 200 million in the immediately preceding twelve consecutive months, declared or worked back from advance income tax that suppliers collect under the Income Tax Ordinance;
6. (h) any person or class prescribed by the Board, with a new proviso letting the Board also exclude persons by notification.

The withholding-tax idea in old limb (g) did not vanish completely. The new limb (gb) uses the same supplier deductions, but only as a way of working back turnover against a fixed Rs. 200 million figure, rather than a Board-notified threshold.

Worked example (illustrative figures)

Nadia runs a 1,200 square foot ladies’ clothing shop on a street in Saddar, Karachi. It is not in a mall, not part of a chain, and it has a card machine from her bank. Her made-up figures: electricity bills of Rs. 480,000 for the last twelve months and turnover of Rs. 28 million.

Test	Nadia’s facts	Met?
Chain store (a)	Single independent shop	No
Air-conditioned mall or plaza (b)	Street-level shop	No
Electricity above Rs. 1,200,000 (c)	Rs. 480,000	No
Turnover above Rs. 200 million (d) or (gb)	Rs. 28 million	No
Board notification (h)	None assumed	No
Card machine	Has one	Not a test since 1 July 2026
Floor area 1,000 sq ft	1,200 sq ft	Not a test since the Finance Act, 2023

On these facts, no current limb applies. If Nadia moved the same shop into an air-conditioned plaza, limb (b) would apply regardless of the card machine or the floor area.

What if …?

What if my shop is in a mall and I take cards? You are Tier-1 because of the mall, under limb (b). The card machine is irrelevant to that result.

What if I was registered and integrated because of the card machine? The Act as amended does not contain a transitional provision for retailers who were Tier-1 only under old limb (f). It does not say whether an existing Tier-1 status, registration or integration ends automatically. The law is silent, so this page does not resolve it.

What if the Board names card-accepting retailers again? Limb (h) lets the Board prescribe any other person or class of persons as Tier-1. Any such notification is outside this corpus.

Common mistakes

• Relying on guidance written before July 2026. Many explanations still list the card-machine test. It was omitted by the Finance Act, 2026.
• Measuring the shop. Floor area has not been a Tier-1 test since the Finance Act, 2023.
• Assuming “not Tier-1” means “no sales tax”. A retailer outside Tier-1 is generally charged sales tax through the monthly electricity bill under section 3(9).
• Forgetting integration for those who remain Tier-1. The proviso to section 23(6) still requires all Tier-1 retailers to integrate their outlets with the Board’s computerized system from the date and in the manner the Board prescribes.

What to check in the official text

Compare clause (43A) of section 2 in the Sales Tax Act as amended to 30 June 2026 with section 4 of the Finance Act, 2026 and section 5 of the Finance Act, 2023. Then check whether the Board has issued any notification under limb (h) that prescribes or excludes your class of retailer.