Reduced income tax rate of Rs5,000 for marriage halls

Reduced income tax rate of Rs5,000 for marriage halls

Reduced income tax rate of Rs5,000 for marriage halls has been announced by the government in a move aimed at providing relief to individuals.

The government has introduced a reduced rate of income tax through the Finance Supplementary (Second Amendment) Bill, 2019. This development, presented on January 23, 2019, brings changes to the First Schedule of the Income Tax Ordinance, 2001, with a specific focus on functions held in areas less than 500 square yards.

According to the amendment, the new rate for marriage functions taking place in a marriage hall, marquee, or a community place with a total function area less than 500 square yards will be 5 percent of the bill ad valorem or Rs5,000 per function, whichever is higher. This adjustment aims to provide a more equitable tax structure for smaller events, recognizing the financial constraints faced by those organizing functions in more compact venues.

The existing rates of withholding tax for organizing functions have been a subject of contention, with the government acknowledging the need for a more nuanced approach. In major cities such as Islamabad, Lahore, Multan, Faisalabad, Rawalpindi, Gujranwala, Bahawalpur, Sargodha, Sahiwal, Shekhurpura, Dera Ghazi Khan, Karachi, Hyderabad, Sukkur, Thatta, Larkana, Mirpur Khas, Nawabshah, Peshawar, Mardan, Abbottabad, Kohat, Dera Ismail Khan, Quetta, Sibi, Loralai, Khuzdar, Dera Murad Jamali, and Turbat, the existing rate is 5 percent of the bill ad valorem or Rs. 20,000 per function, whichever is higher.

For cities not mentioned above, the existing rate is 5 percent of the bill ad valorem or Rs. 10,000 per function, whichever is higher. This tiered approach has often been criticized for being one-size-fits-all, disproportionately impacting those organizing events in smaller venues.

The newly introduced reduced rate for functions in areas less than 500 square yards is seen as a step towards addressing these concerns and promoting inclusivity in the tax system. By differentiating between the scale of events and adjusting the tax rates accordingly, the government aims to ease the financial burden on individuals and families celebrating weddings in more intimate settings.

This move is expected to have a positive impact on the event planning industry, especially for businesses and venues catering to smaller gatherings. It is anticipated that the reduced tax rate will encourage more people to choose smaller venues for their events, leading to a more diverse and vibrant landscape for the celebration industry.

The government’s decision to introduce reduced income tax rates for marriage functions in smaller venues reflects a commitment to creating a fairer tax system that takes into account the diverse socio-economic realities of the population. This targeted approach is likely to be well-received by those organizing events in smaller spaces, providing a financial reprieve and contributing to the growth of the event planning industry in the country.