Pakistan’s supply chain — from manufacturers to retailers — plays a critical role in delivering goods to end consumers. However, for decades, large segments of this chain have remained outside the tax net, resulting in massive revenue leakages. To counter this, the Federal Board of Revenue (FBR) has aggressively deployed advance tax mechanisms under the Income Tax Ordinance, 2001. In Tax Year 2026, these provisions are being used as a key tool to document the economy and broaden the tax base. Let’s understand how advance tax works across the supply chain and what it means for businesses. 🔍 Why Advance Tax on Supply Chain? Traditionally, distributors, wholesalers, and retailers: • Operated without proper tax registration • Underreported income • Escaped income tax enforcement 💡 Advance tax ensures that tax is collected upfront, even if the seller later underreports income. 🏭 Advance Tax on Sales to Distributors & Wholesalers (Section 236G) Under Section 236 of the Income Tax Ordinance, 2001 (updated for TY 2026): 📌 Who Collects the Tax? • Manufacturers • Commercial importers 📌 From Whom? • Distributors • Dealers • Wholesalers 📌 When? • At the time of sale 📌 Key Benefit ✔ The tax collected is adjustable and credited while computing annual income tax of the buyer. 📊 Tax Rates Under Section 236G (ATL Persons) Category of Sale Advance Tax Rate Fertilizers 0.7% Other than Fertilizers 0.1% ✅ Special Relief for Fertilizer Sector If distributors, dealers, or wholesalers of fertilizers: • Appear on both ATL (Income Tax) and Sales Tax Active Taxpayers List, âž¡ Reduced rate applies: 0.25% 🛒 Advance Tax on Sales to Retailers (Section 236H) To bring retailers into the tax net, Section 236H imposes advance tax on retail sales. 📌 Who Collects the Tax? • Manufacturers • Importers • Distributors • Dealers • Wholesalers 📌 From Whom? • Retailers • In some cases, wholesalers…