Does a turnover above Rs. 200 million make my shop Tier-1, and how is a wholesaler-cum-retailer treated?

A retailer whose turnover in the immediately preceding twelve consecutive months exceeds Rs. 200 million is a Tier-1 retailer from 1 July 2026. That is sub-clause (gb) of section 2(43A) of the Sales Tax Act, 1990, inserted by the Finance Act, 2026. The same Act narrowed the wholesaler-cum-retailer limb, which now also needs turnover above Rs. 200 million.

What does the law say?

Section 4(1)(e) of the Finance Act, 2026 made three changes to clause (43A) that matter here:

1. In sub-clause (d), after “wholesaler-cum-retailer”, it inserted “having turnover more than two hundred million rupees”.
2. It omitted sub-clauses (f) and (g). Sub-clause (g) had used a Board-notified threshold of withholding tax under sections 236G or 236H.
3. It inserted a new sub-clause (gb): “a retailer having turnover exceeding two hundred million rupees either by way of declaration or from worked back value of turnover from tax deduction under section 236G or 236H of Income Tax Ordinance, 2001 … during the immediately preceding twelve consecutive months”.

The Finance Act, 2026 states that, unless otherwise provided, it comes into force on the first day of July, 2026.

How do the two turnover limbs differ?

	Sub-clause (d)	Sub-clause (gb)
Who	A wholesaler-cum-retailer engaged in bulk import and supply of consumer goods, wholesale to retailers and retail to the general body of consumers	Any retailer
Turnover condition	More than two hundred million	Exceeding two hundred million rupees
Period stated	None stated	Immediately preceding twelve consecutive months
How turnover is shown	Not stated	By declaration, or worked back from section 236G or 236H tax

Before 1 July 2026, sub-clause (d) had no turnover condition at all. Every bulk-importing wholesaler-cum-retailer fell in Tier-1. Now only those above the threshold do, under that limb.

Section 2(28) adds a related duty: a person who combines import and retail, or manufacture or production with retail, shall notify and advertise wholesale and retail prices separately and declare the address of retail outlets.

Where do sections 236G and 236H come in?

These are income tax collection provisions in the Income Tax Ordinance, 2001, as amended to 30 June 2026.

• Section 236G requires every manufacturer or commercial importer, at the time of sale to distributors, dealers and wholesalers, to collect advance tax at the rate in Division XIV of Part IV of the First Schedule. That rate is 0.1% for goods other than fertilizers and 0.7% for fertilizers.
• Section 236H requires every manufacturer, distributor, dealer, wholesaler or commercial importer, at the time of sale to retailers, to collect advance tax at the rate in Division XV. That rate is 0.5% of the gross amount of sales.

For a buyer not appearing in the active taxpayers’ list, the Tenth Schedule table sets 2% under section 236G (sales other than fertilizer) and 2.5% under section 236H.

Because these taxes are a percentage of what suppliers sold to the retailer, the amount collected points back to the value of the retailer’s purchases. The Sales Tax Act uses this as a second route to turnover, next to the retailer’s own declaration.

Worked example (illustrative figures)

Tariq runs a single large grocery outlet in Rawalpindi. He declares turnover of Rs. 185 million for the last twelve months. His suppliers’ records show they collected Rs. 1,050,000 from him under section 236H in the same period, at the 0.5% rate for a person on the active taxpayers’ list.

Step 1: relate the tax to the sales it was charged on. Rs. 1,050,000 ÷ 0.5% = Rs. 1,050,000 ÷ 0.005 = Rs. 210,000,000.

Step 2: check. Rs. 210,000,000 × 0.005 = Rs. 1,050,000. Correct.

Step 3: compare. His declaration (Rs. 185 million) is below Rs. 200 million. The figure from the section 236H tax (Rs. 210 million) is above it.

Sub-clause (gb) names both routes with “either … or”. It does not say which prevails when they give different answers, and it does not prescribe the working-back method used above. The example shows only that the rate used changes the answer. Had Tariq been off the active taxpayers’ list, the same Rs. 1,050,000 at 2.5% would relate to Rs. 1,050,000 ÷ 0.025 = Rs. 42,000,000.

What if I am a wholesaler-cum-retailer below Rs. 200 million?

Take Shabbir Impex in Karachi (made-up), which imports tinned food in bulk and sells both to shops and to walk-in customers, with turnover of Rs. 150 million. Since 1 July 2026 it is outside sub-clause (d). It is still Tier-1 if any other limb fits: a unit of a chain (a), an air-conditioned mall or plaza (b), electricity bills above Rs. 1,200,000 over twelve months (c), or a Board notification (h).

Common mistakes

• Treating purchases and sales as the same number. Section 236G and 236H tax is charged on sales made to the retailer. The Act calls the result “worked back value of turnover” but does not explain how purchases translate into turnover.
• Assuming the old wholesaler-cum-retailer rule. Turnover now matters for sub-clause (d).
• Looking for the old Board-notified threshold. Sub-clause (g) was omitted by the Finance Act, 2026.
• Using the tax year. Sub-clause (gb) speaks of the immediately preceding twelve consecutive months.

What to check in the official text

Read clause (43A) of section 2 of the Sales Tax Act as amended to 30 June 2026 alongside section 4 of the Finance Act, 2026. The consolidated text of sub-clause (d) reads “having turnover more than two hundred million” without the word “rupees”, while the Finance Act inserts “having turnover more than two hundred million rupees”, so rely on the Finance Act wording. Neither Act defines “turnover” for this clause or sets the working-back method. Also check any Board notification under sub-clause (h), including an exclusion under its new proviso. Those notifications are not in this corpus.