Corrections in red.  Stylistic suggestions and comments in blue.

How we celebrate Eid Festival in Pakistan (Correct it please)

For [1] the occasion of Eid, people prepare new clothes and buy new sandals (footwear), and special new clothes for the children as well. Girls wears new bangles, jewellery and embroidered suits.
Early in the day, male family members offers Eid prayers in the mosque among a huge gathering. Immediately after Eid prayers, people begin to embrace each other in the mosque, along with offering words of congratulation. ("Eid Mubarak").
After that, people start going to their relatives’ homes [alternative:  to the homes of their relatives] to meet and embrace each other.   friend’s family [?? 2] and relatives exchange Eid greetings.
People who work out of town or abroad return home. 
People also go to meet with those people with whom they do not often see in their routine life.
Everyone gathers in someone’s home and enjoys something similar to a mini-party.

[1]  "For" is more appropriate, bec the people prepare new clothes etc. <em>before </em>the Eid holy day, not "on" the very day of the holy day.

[2]  Sorry, I couldn't quite understand the phrase beginning with "friend's family".

Your post was written very well.