A new tax law enacted by the federal government in Islamabad imposes a 15 percent tax on several businesses, including hotels, guest homes, farmhouses, wedding venues, clubs, and catering services.
Ishaq Dar, the finance minister, proposed this tax as a part of the budget for the fiscal year 2023–2024 budget, which has a total budget of Rs.14,460 billion.
The government has also proposed a five percent levy on payments made with credit cards and QR codes from mobile wallets. Within the federal boundaries, there will be a 15% tax on cash purchases in restaurants, coffee shops, food establishments, and ice cream parlors.
The Tax on Services Ordinance, 2001 would need to be amended to implement these tax adjustments, according to a proposal made by the Federal Board of Revenue (FBR) in the Finance Bill 2023-24. The tax rates for several services have also been modified. Software and IT-based system development consultants now pay 15% tax instead of the previous 16% rate. In addition, a 15% tax has been imposed on the delivery of gearboxes and electric services.
In June 2018, Sindh’s provincial high court dismissed a case due to the petitioner’s absence from case hearings, making marriage halls subject to a 15% sales tax on services. The Karachi Marriage Halls/Lawns Owners Association, the petitioner, failed to advance the case as a result of its persistent absence from hearings for several days, leading to the court’s dismissal of the case. Sales tax on the services rendered by marriage halls and lawns has been imposed in Sindh since July 1, 2011, however, it has not been collected as a result of ad-interim rulings issued in response to the petition.
According to a Sindh Revenue Board (SRB) official, standalone wedding lawns, wedding halls, and marquees situated on plots up to 800 square yards are exempt from sales tax provided that they are not air-conditioned, are not situated in hotels or clubs, are not owned, operated, or managed by caterers, and have no branches or other wedding lawns or wedding halls in Sindh.
Marriage halls and lawns must impose a 15% fee on services rendered under the terms of the Finance Act of 2011. “Now that the petition has been dismissed, the SRB will be able to charge and collect sales tax on the services of marriage halls and lawns, including those that are housed in hotels or clubs,” the officer continued.
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