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amilies booking wedding venues in Lahore are increasingly receiving unexpected calls from the Federal Board of Revenue, asking for details about the number of guests and event expenses. The practice has cast a shadow over celebrations across Pakistan.
Under a recently enforced advance, adjustable withholding tax provision, the FBR is seeking information on events held at wedding halls, marquees, hotels, restaurants, clubs and community centres, as well as related services such as catering and decoration.
The tax is charged to the person booking the event, not the venue, and is calculated as a percentage of the bill.
For some families, the policy has taken an emotional toll. Among them is Hassan Ishaq, a newly married banker from Lahore’s Gulberg area, who says the tax demand spoiled his wedding.
“Arranging a wedding reception now feels like being persecuted by tax officials,” says Muhammad Ishaq, the father of the groom.
“We visited at least four halls. Every hall owner told us they could not take responsibility for the withholding tax. This meant the customer had to deal with the FBR staff directly.
Ishaq says the valima for 150 guests cost the family around Rs 200,000. “At a per-head rate of Rs1,200, the total came to about Rs 200,000. On top of that, I had to pay Rs 20,000 as withholding tax,” he says.
The family had hoped to avoid the additional charge but that was not to be.
Khurrum Shahzad, information secretary of the Lahore Marriage Hall Association, says disputes over who should bear the withholding tax have become routine. “It has become a common scene, customers arguing with hall owners, and the hall owners insisting that the tax is not their liability,” he says.
“Some customers argue that the hall should pay the tax. However, the law clearly states that the client must pay it,” Shahzad says.
According to FBR rules, the tax collected under Section 236CB of the Income Tax Ordinance, 2001, varies depending on the filer status of the person or organisation making the booking. Individuals and entities listed on the Active Taxpayers List are charged a 10 percent advance withholding tax. This can later be adjusted against their annual income tax liability. For non-filers, the rate is 20 percent.
“The wedding hall owners are responsible for collecting this tax from the booking party and depositing it with the FBR,” says Shahzad.
He says that the levy applies to the total cost of the function, including all bundled services such as venue rental, catering and decoration.
There is a suggestion that the objective is to bring the large and often undocumented wedding industry into the formal tax net and broaden the country’s overall revenue base.
A similar fixed-charge has already been introduced in Sindh and in some other cities of the Punjab, with officials reporting positive results.
The withholding tax adds to the financial strain of wedding functions, which already require significant spending from many middle- and lower-income families.
“Some people save for years resorting to ‘committees,’ some sell their jewellery or household items and some borrow money. Sometimes close relatives help by paying for the food. Even then, the FBR demands tax on the function. This happens in front of the guests, which is humiliating,” says Dr Sughra Sadaf, chairperson of the Wijdan Institute of Sufism.
Hall owners say the system is unfair. They complain that the FBR expects them to deposit tax even before an event takes place. They say officials insist that they must pay the advance amount before business can be allowed to continue.
The hall owners say that they already bear heavy costs in the form of electricity bills, which include multiple taxes.
“It is like going to a coffee shop and, before even drinking your coffee, being asked to pay next month’s tax in advance. It simply does not make sense,” says Sharjeel Tahreef, a corporate lawyer.
For Muhammad Ishaq, however, the biggest issue was the behaviour of the inspection teams on the wedding day. “These teams entered the hall during the function, disturbed guests, counted chairs and interrogated the cooks. They even went into the washrooms asking guests, ‘Where are you from? What did you eat? How much did you pay?’ It was extremely disrespectful. The guests felt embarrassed. It was a violation of the host’s dignity,” he says.
He adds that the presence of uniformed officials caused a scare. “When FBR officers walked in wearing uniforms, many guests thought the police had arrived; they couldn’t tell the difference. People started asking whether there had been a fight or if something had gone wrong. It created an embarrassing situation for everyone.”
To address the growing frustration, the Marriage Hall Association has been in talks with the FBR, proposing a flat tax per event rather than a percentage-based levy.
“They could charge Rs 2,000, Rs 3,000 or Rs 5,000 per event, depending on the category of the hall. But this 10 percent rate is unfair because not everyone can afford it,” says Sharjeel.
He says Lahore has around 500 wedding halls, all of which are subject to oversight from multiple departments. “There are eight departments that inspect and question them, the FBR, the Food Department, the Punjab Food Authority, the Intelligence Department for security checks, LDA, TEPA, WASA and even the district government,” he says.
Ishaq says that while inspectors did not directly ask for bribes, their presence and behaviour caused significant disturbance and business loss.
Khurrum emphasises that the association is not opposed to taxation. He says they only want a system that is fair and dignified. “We are cooperating with the FBR. We are hopeful that tax collection will be made easier, more reasonable and respectful,” he says.
A fixed-tax system has already been introduced in Sindh and in some other cities of the Punjab, with officials reporting positive results.
When contacted, Chief Commissioner Amina Faiz Bhatti referred the matter to her deputy, Chaudhry Murtaza Ali Akbar. He said wedding hall owners must comply with the law and that willing cooperation would help streamline the process. He confirmed that he had attended the most recent meeting with the association, calling it a sign that discussions were moving in the right direction.
However, he noted that the matter ultimately falls under the authority of Bilal Hassan, Commissioner of Inland Revenue (WHT Zone), who will have the final say. Hassan could not be reached for comment as his office was locked on Friday while he was saying the Friday prayers.
The writer is the editor of Minute Mirror.He may be reached atahsanbudhhotmail.com