Heavy Taxes Increase Wedding Costs

By Published On: February 27, 20232.5 min readViews: 1098

Heavy Taxes Increase Wedding Costs

By Published On: February 27, 20232.5 min readViews: 1098
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New income tax rate on marriage functions in Pakistan has been introduced through Finance (Supplementary) Act, 2023. The rate shall be applicable

at 20 per cent on the persons not appearing on the Active Taxpayers List (ATL), sources in Federal Board of Revenue (FBR) said.

Besides, enhancement of sales tax rate from 17 per cent to 18 per cent also increased cost of many related things to marriage functions.

Furthermore, recent increase in electricity prices, gas prices and high prices of petroleum products have their separate affects.

The government introduced a mini budget on February 15, 2023 to comply with conditions of the International Monetary Fund (IMF) to general additional revenue to bridge fiscal gap. The introduction of measures aimed at generating additional Rs170 billion. The bill has been passed by both the houses and signed by the President to make it the Act.

Millions of marriage functions being organized annually in Pakistan. Reportedly, the wedding industry is worth Rs900 billion annually in the country.

In a recent move, through Finance (Supplementary) Act, 2023, an new section 236CB has been introduced to Income Tax Ordinance, 2001.

The text of the new section read as:

“(1) Every prescribed person shall collect advance tax at the rate specified in Division Xl of Part lV of the First Schedule on the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose, subject to such conditions or limitations as may be prescribed.

(2) Where the food, service or any other facility is provided by any other person, the prescribed person shall also collect advance tax on the payment for such food, service or facility at the rate specified in Division Xl of Part lV of the First Schedule from the person arranging or holding the function.

(3) The advance tax collected under sub-section (1) and subsection (2) shall be adjustable.

(4) ln this section –

(a) “function” includes any wedding related event, a seminar, a workshop, a session, an exhibition, a concert, a show, a party or any other gathering held for such purpose; and

(b) “prescribed person” includes the owner, a leaseholder, an operator or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.”

The tax rate under Division Xl of Part lV of the First Schedule of the Income Tax Ordinance, 2001 is 10 per cent. However, it will enhance by 100 per cent to 20 per cent on those persons not appearing on the Active Taxpayers List (ATL).

The rate of sales tax has been increased to 18 per cent, which will inflate prices of all consumable things related to wedding functions. Furthermore, the enhancement in federal excise duty on juices and aerated waters will have extra cost to marriage functions.

An analyst said that the new taxation measures and fresh wave of price hike have increased the cost of marriage function almost double.

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Rida Malik

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