Is 236G and 236H tax final, or can I adjust it against my income tax and claim a refund of any excess?

Advance tax under sections 236G and 236H is a payment towards the buyer’s own income tax for the year. A wholesaler who pays it to a manufacturer, or a retailer who pays it to a distributor, claims it back as a credit when the year’s tax is worked out. Where the credit is larger than the tax, the Income Tax Ordinance, 2001 provides a refund route.

What does the law say?

Four provisions of the Ordinance, as amended to 30 June 2026, fit together.

• Section 236G(2) allows credit for tax collected on sales to a distributor, dealer or wholesaler “in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.”
• Section 236H(2) gives the same credit to the retailer from whom tax was collected under section 236H(1).
• Section 168(1)(b) treats tax collected under Chapter XII, where both sections sit, as “tax paid by the person from whom the tax was collected”. Section 168(2) allows it as a tax credit for the tax year in which it was collected.
• Section 170(1) lets a taxpayer who has paid more than the amount properly chargeable apply to the Commissioner for a refund of the excess.

Section 168(5) joins these up: a tax credit for a year that cannot be credited for that year “shall be refunded to the taxpayer in accordance with section 170.”

Is it ever treated as final tax?

Section 168(3) lists the final taxes for which no credit is allowed. In the text amended to 30 June 2026 that list covers provisions such as section 152(1E), section 156(3) and section 236Z(7). Sections 236G and 236H are not on it, and their own sub-section (2) grants credit in plain terms.

Worked example (illustrative figures)

The traders and amounts below are invented. The rates are the real tax year 2027 rates in Division XIV (0.1% for goods other than fertilizers) and Division XV (0.5%) of Part IV of the First Schedule.

Wholesaler with more credit than tax. Bilal Traders, a Faisalabad wholesaler of household goods, buys Rs. 60,000,000 of stock from manufacturers in tax year 2027.

1. Section 236G collected at 0.1%: Rs. 60,000,000 x 0.1% = Rs. 60,000.
2. Tax computed on Bilal Traders’ taxable income for the year (assumed): Rs. 45,000.
3. Credit available: Rs. 60,000.
4. Rs. 45,000 minus Rs. 60,000 = minus Rs. 15,000. Nothing is payable for the year.
5. The unused Rs. 15,000 falls under section 168(5) and is dealt with under section 170.

Retailer with less credit than tax. Kamran General Store in Sialkot buys Rs. 12,000,000 of goods from distributors in the same year.

1. Section 236H collected at 0.5%: Rs. 12,000,000 x 0.5% = Rs. 60,000.
2. Tax computed on the store’s taxable income (assumed): Rs. 95,000.
3. Rs. 95,000 minus Rs. 60,000 = Rs. 35,000 still payable. There is no refund.

The “tax due” in step 2 of each case is whatever the Ordinance charges for the year. Sections 236G and 236H do not themselves explain how their credit interacts with the minimum tax on turnover under section 113; the related pages on minimum tax set out that section’s own rules.

How does a refund claim work?

Step	What section 170 says
Application	In the prescribed form and verified in the prescribed manner (170(2)(a) and (b))
Time limit	Within three years of the later of the assessment order date for that tax year or the date the tax was paid (170(2)(c))
Use of the excess	First against any other tax due under the Ordinance, then against other outstanding tax liabilities, and the rest is refunded (170(3))
Decision	A written order within sixty days of receiving the application, after an opportunity of being heard (170(4))
Refusal or delay	Appeal under Part III of the same Chapter, against the order or against a failure to pass one in time (170(5))

What if I am not on the Active Taxpayers’ List?

Rule 1 of the Tenth Schedule sets higher rates for buyers not on the list: 2% for section 236G on goods other than fertilizer, and 2.5% for section 236H. That is still tax collected under sub-section (1) of each section, and sub-section (2) allows credit for it without reference to the rate. A buyer who is off the list pays far more up front, so the chance of an excess credit, and a refund claim, is higher.

What if the stock is resold in the next tax year?

Both sections tie the credit to “the tax year in which the tax was collected”. Goods bought in June and sold in August still carry their 236G or 236H credit into the year of purchase, not the year of sale.

Common mistakes

• Booking 236G or 236H as a cost of goods and forgetting it. Section 168(1)(b) makes it tax paid, which is claimed as a credit.
• Assuming unused credit rolls into next year. Section 168(5) sends unused credit to a refund under section 170. It does not provide a carry forward.
• Missing the three-year window. Section 170(2)(c) sets the time limit for the application.
• Claiming credit for tax the seller never collected. Credit is for tax actually collected under sub-section (1).

What to check in the official text

Read sections 236G, 236H, 168 and 170 of the Ordinance amended to 30 June 2026, and Divisions XIV and XV of Part IV of the First Schedule for the rates. Section 170 refers to a prescribed form and manner of verification, which are set in rules. The online filing steps on FBR’s system are outside the text covered here.