What is the section 236G rate for tax year 2027 for a distributor on the Active Taxpayers List and one who is not?

A distributor, dealer or wholesaler pays section 236G tax at one of a small number of rates, and the rate turns on two things: whether the goods are fertilizer, and whether the buyer appears on the Active Taxpayers’ List. The difference between being on and off the list is large, as the example below shows.

What rates does the law set for tax year 2027?

Section 236G(1) of the Income Tax Ordinance, 2001 tells every manufacturer or commercial importer to collect advance tax “at the rate specified in Division XIV of Part IV of the First Schedule”. The Ordinance as amended to 30 June 2026 gives these rates, which apply to tax year 2027 (1 July 2026 to 30 June 2027):

Goods	Buyer on the Active Taxpayers’ List	Buyer not on the list
Other than fertilizers	0.1% (Division XIV)	2% (Tenth Schedule, serial 3)
Fertilizers	0.7% (Division XIV), or 0.25% if on both lists	Rule 1 of the Tenth Schedule: rate increased by 100%

The 0.25% figure comes from the proviso to Division XIV. It applies to fertilizer sold to distributors, dealers or wholesalers “if they are already appearing on both the Active Taxpayers’ Lists issued under the provisions of the Sales Tax Act, 1990 and the Income Tax Ordinance, 2001”.

Where does the higher rate come from?

Section 100BA says the collection of advance income tax from a person not appearing in the Active Taxpayers’ List “shall be determined in accordance with the rules in the Tenth Schedule”, and section 100BA(2) gives the Tenth Schedule effect notwithstanding anything else in the Ordinance.

Rule 1 of the Tenth Schedule has a general rule and a table:

• The general rule. Where tax is collected from a person not on the list, the rate “shall be increased by hundred percent of the rate specified in” the Ordinance.
• The table under the third proviso. Serial 3 fixes 2% for section 236G “On the gross amount of sale to distributors, dealers or wholesalers other than sale of fertilizer”. Serial 4 fixes 2.5% for section 236H.

Because serial 3 expressly leaves out fertilizer, a fertilizer sale to a buyer off the list falls back to the general rule. Increasing 0.7% by one hundred percent of 0.7% gives 1.4%. The Tenth Schedule does not print that figure; it is the arithmetic of rule 1’s words.

Worked example (illustrative figures)

Bilal Traders is a distributor in Multan. In tax year 2027 it buys cooking oil worth Rs. 5,000,000 from a manufacturer, and separately buys fertilizer worth Rs. 2,000,000 from a fertilizer company. The amounts are invented; the rates are the ones above.

Cooking oil (other than fertilizer), Rs. 5,000,000

1. On the Active Taxpayers’ List: Rs. 5,000,000 x 0.1% = Rs. 5,000.
2. Not on the list: Rs. 5,000,000 x 2% = Rs. 100,000.
3. Difference: Rs. 100,000 minus Rs. 5,000 = Rs. 95,000.

Fertilizer, Rs. 2,000,000

1. On both the income tax and sales tax lists: Rs. 2,000,000 x 0.25% = Rs. 5,000.
2. On the income tax list only: Rs. 2,000,000 x 0.7% = Rs. 14,000.
3. Not on the income tax list: 0.7% increased by 100% is 1.4%, so Rs. 2,000,000 x 1.4% = Rs. 28,000.

So on the same Rs. 7,000,000 of purchases, Bilal Traders has Rs. 10,000 collected if it is on both lists (Rs. 5,000 plus Rs. 5,000), and Rs. 128,000 if it is on neither (Rs. 100,000 plus Rs. 28,000).

What if the distributor gets on the list during the year?

Rule 1 of the Tenth Schedule applies “Where tax is required to be deducted or collected” from persons not appearing in the list, so the question is the buyer’s status when the tax is collected at the time of sale. The Ordinance text does not say how a manufacturer checks the list or on what date; that is a matter of procedure outside the text reproduced here.

What if the higher rate was already collected?

Section 236G(2) gives the distributor credit for tax collected under section 236G(1) in computing its tax for the tax year in which it was collected. Rule 4(3) of the Tenth Schedule also says that where returns are filed before a provisional assessment, or within the period allowed after one, “the tax deducted or collected under rule 1 shall be adjustable against the tax payable in the return filed for the relevant tax year”.

Rule 3 sets out what happens if a person whose tax was collected under rule 1 does not file a return by the due date: the Commissioner makes a provisional assessment, imputing income from the tax collected and treating that imputed income as concealed income.

What about a distributor on the list who files late?

Section 100BA(1) extends the Tenth Schedule to “persons appearing on the active taxpayers’ list who have not filed return by the due date”. Rule 1A of the Tenth Schedule, which set rates for that group, was omitted by the Finance Act, 2026, and rule 1 as it now reads speaks only of persons not appearing in the list. The consolidated text does not state a separate section 236G rate for a late filer who is on the list, and this page does not try to supply one.

Common mistakes

• Doubling 0.1% for a buyer off the list. For goods other than fertilizer, the Tenth Schedule table fixes 2%, not 0.2%. The 0.2% figure belonged to the filer and non-filer columns in the version of Division XIV substituted by the Finance Act, 2019.
• Assuming the 0.25% fertilizer rate follows from the income tax list alone. The proviso needs both lists.
• Treating the extra tax as a penalty that is simply lost. It is collected under section 236G, and credit is given under section 236G(2). What cannot be recovered in practice depends on the distributor’s own tax position for the year.

What to check in the official text

Read Division XIV of Part IV of the First Schedule with its proviso, and rule 1 of the Tenth Schedule with the Table under its third proviso, in the Income Tax Ordinance amended to 30 June 2026. Confirm the buyer’s status on both Active Taxpayers’ Lists on the date of sale, and note the omission of rule 1A by the Finance Act, 2026 if the buyer is on the list but filed late.