Under the Finance (Supplementary) Bill, 2023, advance tax on functions and gatherings has been intended to be reintroduced and tax is required to be withheld at 10 percent for filers and 20 percent for non-filers.
ProPakistani approached Asif S Kasbati, FCA, FCMA & Senior Tax Expert for an explanation of the proposal who elaborated that Advance Tax on functions and gatherings has been intended to be reintroduced, whereby every prescribed person (being the owner, a lease-holder, 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) shall collect advance tax.
The rate will be applied to the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, community place, or any other place used for such purpose.
Where the food, service, or any other facility is provided by any other person, the above-specified person shall also collect advance tax on the payment for such food, service, or facility at 10 percent from filer and 20 percent from non-filer who is arranging or holding the function. The tax will be adjustable against income subject to the normal tax regime and if it could not be adjusted, the same will be refundable.
For the above purposes, “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.
Kasbati added that a similar tax was earlier applicable but omitted by the Finance Act 2020. He said that the provisions are very good and revenue-generating measures as billions of rupees are spent on marriages of high-worth individuals however there should be exemptions for the corporate sector and expenses up to Rs. 50,000 for facilitating middle and lower class.
Earlier such provisions did not collect much tax revenue due to a lack of enforcement measures, hence, it is recommended that the provisions be implemented in full swing like POS Sales Tax. Moreover, this withholding tax will trigger the recording of revenue for the receiver leading to more tax revenue.