Section 236G/H — Distributors & Retailers Withholding Tax
Section 236G/H WHT Pakistan TY 2025-26 — 0.1% fertilizer / 0.2% other distributors, 0.5% specified retailers (filer); non-filer rates 2-2.5%.
Sections 236G and 236H impose advance income tax on sales by manufacturers and wholesalers to distributors and retailers. 236G — sales to distributors: 0.1% (fertilizer, filer) / 2% (non-filer); 0.2% (other goods, filer) / 2% (non-filer). 236H — sales to specified retailers: 0.5% (filer) / 2.5% (non-filer). Collected by the manufacturer/wholesaler at the moment of invoice.
These sections are particularly relevant to FMCG distribution chains, fertilizer manufacturers, and pharma distributors. The withholding agent (the manufacturer or wholesaler) deducts on invoice and remits to FBR; the distributor or retailer claims the deduction as advance tax in their annual return. Non-filer rates are punitive — small distributors and retailers face strong pressure to maintain ATL.
Section 236G/H deductions are minimum tax — the distributor/retailer pays the higher of WHT collected or slab-based liability. For thin-margin distribution businesses, the WHT can exceed actual slab tax on net profit, creating an effective minimum tax floor on gross sales. This is the structural reason many Pakistani distribution-business profits are reported as 'business income' under slabs rather than treated as final tax.
Frequently asked questions
What's the Section 236G rate?
0.1% fertilizer / 0.2% other goods for filers. Non-filers pay 2% across the board. Collected by the manufacturer or wholesaler at invoice.
What's the Section 236H rate?
0.5% for filer-specified retailers / 2.5% for non-filers. Targets sales by manufacturers/wholesalers to retailers in specified sectors.
Is Section 236G/H final or minimum tax?
Minimum tax — the distributor/retailer pays the higher of WHT collected or slab-based liability. Creates an effective minimum tax floor on gross sales.
Do FMCG distributors face 236G?
Yes — every invoice from a manufacturer or wholesaler triggers 236G at the relevant rate. Maintaining ATL keeps the rate at 0.2% vs 2% for non-filers.