Karachi, January 23, 2024 – As the tax year 2024 kicks off, the Federal Board of Revenue (FBR) in Pakistan has unveiled the updated income tax rates applicable to functions and gatherings, specifically those organized in the context of marriage ceremonies.
The changes come as part of the FBR’s efforts to streamline tax collection and ensure a fair contribution from various sectors.
According to the FBR’s notification, the Income Tax Ordinance of 2001 has been revised to incorporate advance tax rates on functions and gatherings held in marriage halls, marquees, hotels, restaurants, commercial lawns, clubs, community places, or any other venues designated for such purposes. The objective is to regulate tax collection from those arranging or hosting events in these locations, with certain conditions and limitations in place.
Under the updated ordinance, every prescribed person, defined as the owner, lease-holder, operator, or manager of a venue, is mandated to collect advance tax at rates specified in Division XI of Part IV of the First Schedule. This tax is applicable to the total amount of the bill for hosting the event. Additionally, if any other person provides food, services, or other facilities, the prescribed person must collect advance tax on the payment for such provisions.
The FBR has clarified that the advance tax collected under these provisions is adjustable. This means that individuals and entities organizing events can offset the tax amount against their total tax liability, providing some flexibility in the overall tax structure.
The newly defined scope of “function” includes a wide array of events such as weddings, seminars, workshops, sessions, exhibitions, concerts, shows, parties, or any other gatherings held for similar purposes. This comprehensive definition ensures that a variety of events are covered under the purview of the income tax regulations.
For the determination of tax rates, the FBR has established a clear distinction between income tax return filers and non-filers. Income tax return filers will be subject to a 10% tax rate, while non-filers will face a higher rate of 20%. This categorization aims to incentivize individuals and businesses to fulfill their tax obligations by offering a reduced tax burden for those who comply with the income tax return filing requirements.
The FBR’s decision to differentiate tax rates based on filing status is a strategic move to encourage tax compliance among the populace. By providing a lower tax rate for return filers, the authorities hope to promote a culture of tax transparency and responsible financial conduct.
The updated income tax rates for marriage gatherings in Pakistan for the tax year 2024 bring a nuanced approach to tax collection. The FBR’s focus on ensuring equitable contributions from event organizers, coupled with the incentive for income tax return filers, reflects a commitment to a fair and balanced tax system in the country. As individuals and businesses navigate these new regulations, it is essential to stay informed and comply with the prescribed tax requirements to contribute to the nation’s economic development.
