Distributors and Wholesalers in Pakistan: 0.5% Minimum Tax on Listed Goods

Short answer: The Finance Act 2026 sets the minimum tax under section 113 at 0.5% for distributors, dealers, sub-dealers and wholesalers of the goods listed in the Act, such as pharmaceuticals, fertilizer, sugar and packaged food. The reduced rate applies only if you appear on both the sales tax and the income tax Active Taxpayer Lists.

If you sell wholesale in Pakistan, your minimum tax depends on what you sell and on your filer status. The Finance Act 2026 rewrote clause (24D) of Part II of the Second Schedule to the Income Tax Ordinance. It now lists the goods that get the 0.5% rate.

We read that clause in the Act on FBR's own download site on 13 October 2026. This page shows the list, the condition and how to check you meet it.

Minimum tax is the floor on your income tax bill

Section 113 sets a minimum tax charged on turnover, which is your total sales. You pay it even in a year when the business makes a loss, or when normal tax comes out lower. A reduced rate means a smaller floor on turnover.

That matters for a wholesaler with thin margins. On Rs 100,000,000 of sales, a 0.5% floor is Rs 500,000. We read the Act's rate for the listed goods but did not read the rate that applies to other goods, so compare it against your last return.

The listed goods get the reduced 0.5% rate

The Act lists the goods in a table. The printed Gazette layout is broken in places, so we group the entries we could read clearly. The Act itself numbers them in a single column.

Read the goods names rather than any numbering. Confirm the exact list in the official Gazette before you rely on it for a return.

You must be on both Active Taxpayer Lists

The Act gives the reduced rate to beneficiaries who appear on the active taxpayers' lists under the Sales Tax Act, 1990 and under the Income Tax Ordinance, 2001. That means two lists, not one.

A business on only one list does not meet the condition as the Act is written. Check both before you file. Our guide on the Active Taxpayers List after the 15 October deadline explains how listing works. You can also check your filer status with one SMS.

1. Check that your NTN is on the income tax Active Taxpayer List.
2. Check that your sales tax registration is on the sales tax Active Taxpayer List.
3. Match your trade to a good in the table above.
4. Confirm you act as a distributor, dealer, sub-dealer or wholesaler of that good.
5. Apply the 0.5% rate in your return and keep proof of both listings.

A worked example shows what the floor means

Take a sugar distributor with sales of Rs 400,000,000 in a tax year, who is on both lists. The 0.5% minimum tax is Rs 2,000,000. If the distributor's normal income tax for the year works out to Rs 1,200,000, the higher figure, the minimum tax, is the amount that counts.

If the same distributor drops off one list, the Act's condition for the reduced rate fails. We did not read the rate that would then apply, so the bill could be higher. The example is our own arithmetic, not an FBR figure. Remove off-list risk by checking your status early in the year.

Keep the sales records that show the goods you handled. A mixed trader who sells listed and unlisted goods should expect to separate the turnover, but the Act does not explain how, so ask your tax adviser.

Retailers and manufacturers are a different case

The clause names distributors, dealers, sub-dealers and wholesalers. It does not name retailers or manufacturers. A retailer who sells the same goods should not assume the 0.5% rate applies.

The Act also changes how large retailers are treated under the sales tax law, using a turnover line of Rs 200 million for some retail groups. That is a separate rule for POS integration. See FBR's POS integrated retailers for that side.

Common questions

What is the reduced minimum tax rate for distributors?

The Finance Act 2026 sets it at 0.5% for distributors, dealers, sub-dealers and wholesalers of the listed goods.

Do I need to be a filer to get the 0.5% rate?

Yes. The Act requires you to appear on the active taxpayers' lists under both the Sales Tax Act and the Income Tax Ordinance.

Does the rate cover retailers?

The clause names distributors, dealers, sub-dealers and wholesalers. It does not name retailers.

Is sugar on the list?

Yes. Sugar is named in the Act's table, alongside pharmaceutical, fertilizer and cigarette.

What is minimum tax?

It is a floor charged on turnover under section 113. You pay it when normal tax on income comes out lower.

From when does the new clause apply?

The Finance Act 2026 came into force on 1 July 2026 unless it says otherwise. We found no later start for this clause.

How we verified this

What we checked, where we read it, and what we could not confirm.

Last checked on 13 October 2026, Pakistan time. We read clause (24D) as substituted by the Finance Act 2026 on FBR's download site. The printed table is badly laid out in the file we read, so the exact entries and the rate for goods outside the list are unconfirmed. We did not read an FBR circular on it.