Advance adjustable tax will apply to weddings, seminars, exhibitions and other events held at designated venues under the updated Income Tax Ordinance.
ISLAMABAD: The Federal Board of Revenue (FBR) has imposed a 10% adjustable withholding tax on marriage functions and other social gatherings under the updated Income Tax Ordinance, 2001, applicable to Tax Year (TY) 2027, starting from July 1. 2026.
The updated Income Tax Ordinance, incorporating amendments introduced through the Finance Act, 2026, provides that advance tax will be collected on the total bill of specified functions held at designated venues.
Advance tax to be collected on event bills
Under Section 236CB of the Income Tax Ordinance, every prescribed person is required to collect advance tax at the rate specified in the First Schedule from any person arranging or holding a function at:
• Marriage halls
• Marquees
• Hotels
• Restaurants
• Commercial lawns
• Clubs
• Community centres
• Any other venue used for such functions
The tax will be collected on the total amount of the bill charged for the event and will be adjustable against the taxpayer’s final income tax liability.
Catering and related services also covered
The law also extends the withholding tax requirement to payments for food, catering, decoration and other services provided by third-party vendors.
Where such services are supplied by another service provider, the prescribed person operating the venue must collect advance tax on the payments made for those services at the prescribed rate.
The tax collected under these provisions will remain adjustable against the recipient’s final tax liability.
Wide definition of ‘function’
Section 236CB adopts a broad definition of the term “function”, extending the tax beyond wedding ceremonies to include a variety of social and commercial events.
The definition covers:
• Wedding-related events
• Seminars
• Workshops
• Training sessions
• Exhibitions
• Concerts
• Shows
• Parties
• Any other similar gathering
This wider scope means the withholding tax applies to a broad range of organised events held at designated venues.
Venue operators responsible for tax collection
The Ordinance defines a “prescribed person” as the owner, leaseholder, operator or manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, community centre or any other venue used for such functions.
These persons will be responsible for collecting the advance tax from customers and depositing it with the FBR in accordance with the provisions of the Income Tax Ordinance.
Tax rate for TY 2027
According to Division XI of Part IV of the First Schedule to the Income Tax Ordinance, 2001, the withholding tax rate under Section 236CB has been set at 10% for Tax Year 2027.
The measure forms part of the Finance Act, 2026 amendments aimed at expanding the advance tax regime, improving documentation of high-value transactions and strengthening tax compliance relating to weddings, corporate events and other organised gatherings.