The junta has in the past blamed bombings on anti-government dissident groups and separate ethnic rebels seeking autonomy in the former Burma, which has been under military rule since 1962.
There were no immediate claims of responsibility. State TV said five men and three women were killed. Hospital sources had put the toll at nine.
Witnesses said they heard three loud explosions at a pavilion alongside Kandawgyi Lake.
Revellers in Myanmar, as well as neighboring Thailand and Laos, celebrate New Year by dousing friends and strangers with scented water and white powder.
Most of the pavilions on U Htaungbo Road, along the scenic lakeside, are run by companies close to the authorities.
In May 2005, three bombs exploded at a convention center and supermarkets, killing 23 people and wounding more than 160. There have been a few sporadic bombings since.
At the time, the authorities blamed ethnic rebel groups, including the Karen National Union, the Shan State Army-South, and the Karenni National Progressive Party, as well as a government in exile known as the National Coalition Government of the Union of Burma, which opposes the junta's rule.
In 1990, Nobel Peace Prize laureate Aung San Suu Kyi's party won a general election but was not allowed to take power by the military, which continues to maintain a tight grip on the country.
An election is expected to be held later in the year but no timeframe has been specified. The upcoming poll has been widely derided in advance as a sham to make the country appear democratic, with the military retaining control over key institutions.
Suu Kyi, currently under house arrest, has been in detention without trial for more than 15 of the past 21 years.
Tension with armed ethnic groups has been rising in Myanmar in recent weeks following attempts by the regime to forcibly recruit rebel fighters for an army-run border patrol force.
Critics say Myanmar's army is seeking to neutralize ethnic minorities ahead of the elections.
Many of the ethnic groups do not trust the military and its ethnic Burman leaders, whom they have long resented, and feel they have nothing to gain by taking part in the electoral process.
If they disarm and surrender hard-won autonomy, they could lose control over lucrative trade in natural resources and, in some cases, in opium and methamphetamines.
