GST for Interior Designers and Contractors: Complete GST Guide

GST for interior designers and contractors covers the taxation of services related to planning, designing, executing, and furnishing interior spaces — residential, commercial, or hospitality. The GST treatment depends on the nature of the contract:

• Pure design consultancy (no material): A service taxable at 18% under SAC 9983 (Other professional, technical and business services). The designer provides drawings, mood boards, 3D renders, and site supervision. No material is supplied.
• Turnkey / works contract (design + material + execution): When the designer supplies materials and executes the work, it becomes a works contract under Section 2(119) of the CGST Act, 2017, taxable at 18% under SAC 9954 (Construction services). The entire project value — design fees, material costs, and labour — is treated as a single composite supply.
• Furniture supply with installation: Also a works contract at 18%.
• Standalone furniture sale (no installation): Supply of goods, taxed at applicable GST rates for furniture (typically 18%).

Understanding this distinction is critical because the invoice format, SAC code, ITC eligibility, and compliance obligations differ. Misclassification can lead to ITC denial, demand notices, and penalties under Section 73/74. This article provides comprehensive guidance for every scenario.

The GST rate is 18% whether the interior designer provides pure consultancy or a turnkey works contract. The classification and SAC code differ, but the rate is uniform. The table below summarises the rates applicable to different types of interior design supplies:

Interior contract work — such as false ceiling, flooring, carpentry, electrical, plumbing, painting, and modular kitchen installation — is a works contract under Section 2(119) of the CGST Act. The contractor charges 18% GST on the total contract value and can claim full ITC on materials and sub‑contractor charges. Key points to remember:

• Composite supply: The entire contract is treated as a single service. The contractor cannot bill materials separately at a lower rate.
• Place of supply: Location of the immovable property (Section 12(3) IGST Act). If the contractor is registered in Delhi and the project is in Noida, IGST must be charged.
• ITC eligibility: ITC is available on all inputs — plywood, paint, hardware, tiles, electrical fittings, and sub‑contractor invoices.
• e‑Invoicing: Mandatory for contractors with aggregate turnover above ₹5 crore.

For small interior works where only labour is supplied (e.g., a carpenter hired by a homeowner), the service is exempt for residential use if no material is supplied by the contractor. For commercial clients, even pure labour is taxable at 18%.

For residential home interiors, the GST rate is 18% on works contract services. However, there is a valuable exemption:

• Pure labour exemption: Under Notification 12/2017‑CT(R) Entry 10, pure labour contracts for construction, erection, commissioning, or installation of original works pertaining to a single residential unit are exempt from GST. This applies when the homeowner supplies all materials and the contractor provides only labour.
• Works contract: In most practical home interior projects, the contractor supplies at least some material (paint, hardware, plywood, etc.). This makes the entire contract a taxable works contract at 18%.
• No ITC for homeowner: Homeowners cannot claim ITC, so the 18% GST is a final cost.

Turnkey home interior projects — including modular kitchen, wardrobes, false ceiling, and painting — are fully taxable at 18%. The contractor must issue a tax invoice with SAC 9954 and charge CGST+SGST or IGST based on the place of supply.

Renovation, remodelling, and repair of existing interior spaces — whether residential or commercial — are works contracts under Section 2(119) and attract 18% GST. This includes:

• Repainting of walls and ceilings
• Flooring replacement (tiles, wood, vinyl)
• Bathroom remodelling
• Kitchen renovation
• False ceiling repair

If the contractor supplies materials along with the service, it is a taxable works contract. If only labour is provided and the client supplies all materials, the service may be exempt for residential clients (Notification 12/2017‑CT(R)). For commercial renovation, even pure labour is taxable at 18% because the exemption applies only to residential use.

Yes. Under Section 16 of the CGST Act, interior designers providing taxable works contract or consultancy services can claim ITC on all business-related purchases. Eligible ITC includes:

• Furniture and fixtures: Sofas, chairs, tables, beds, modular units purchased for client projects.
• Raw materials: Plywood, laminates, paint, hardware, tiles, electrical fittings, glass, stone.
• Capital goods: Laptops, design software, 3D printers, office furniture.
• Input services: Sub‑contractor charges, professional fees, office rent, telephone bills, travel expenses.
• GST paid under RCM: On GTA services (18% with ITC) or advocate fees (18%).

However, ITC is blocked under Section 17(5) for:

• Goods and services used for construction of own immovable property (e.g., renovating one's own office or home).
• Personal consumption (food, beverages, personal vehicle).
• Exempt supplies (pure labour contracts for homeowners).

All ITC claims must be matched with GSTR‑2B. Claims beyond GSTR‑2B attract automatic demand under Rule 36(4). Proportionate reversal under Rule 42 is required if the designer handles both taxable and exempt projects.

Interior designers and contractors must navigate a multi‑layered return filing system. Unlike simple service providers, they handle project‑wise invoices, material ITC, sub‑contractor charges, and sometimes e‑invoicing. Missing a single reconciliation can block ITC or delay client payments. The core returns — GSTR‑1, GSTR‑3B, and GSTR‑9 — must be filed accurately and on time.

🔁 ITC Reconciliation — Critical Step Before Filing GSTR‑3B

Before claiming Input Tax Credit in GSTR‑3B, interior designers must reconcile their purchase register with GSTR‑2B every month. GSTR‑2B is an auto‑generated ITC statement that shows all invoices uploaded by suppliers in their GSTR‑1. Under Rule 36(4), ITC can be claimed only to the extent it appears in GSTR‑2B. Key points:

• Download GSTR‑2B from the GST portal before the 14th of each month.
• Match each purchase invoice (furniture, materials, sub‑contractor, office rent, software) with GSTR‑2B line items.
• If a supplier's invoice is missing from GSTR‑2B, follow up immediately and do not claim ITC on that invoice in GSTR‑3B.
• Claim only the eligible ITC in GSTR‑3B Table 4(A). Reverse any blocked ITC (own‑use renovation, personal expenses) in Table 4(B).

GSTR‑2B reconciliation is the single most effective safeguard against automatic Show Cause Notices and ITC demands. Interior designers often purchase materials from multiple vendors; a single unreconciled invoice can trigger a system‑generated notice.

⏰ Late Filing Penalties & Interest

• Late fee for GSTR‑1 / GSTR‑3B: ₹50 per day (₹25 CGST + ₹25 SGST) per return, capped at ₹10,000 per return. Nil return late fee is ₹20 per day.
• Interest on late tax payment: 18% per annum under Section 50, calculated from the due date to the actual date of payment.
• Non‑filing for six consecutive months: Registration may be cancelled under Section 29(2).

Pure interior design consultancy — where the designer provides drawings, mood boards, 3D renders, and site supervision but does not supply any materials — is a professional service taxable at 18% under SAC 9983. Key points:

• The consultant can claim ITC on business expenses.
• If the consultancy is bundled with execution, it becomes a works contract. The contract should explicitly state whether materials are included to avoid classification disputes.
• For international clients (export of services), the service may qualify as a zero‑rated supply if the conditions of Section 16 of the IGST Act are met.

• Is GST applicable on interior design services? +

  Yes, GST is applicable on all interior design services at 18%. The GST treatment depends on the nature of the service:

  • Turnkey / works contract (design + material + execution): Taxable at 18% under SAC 9954 (Construction services). The designer charges GST on the total project value and can claim full ITC on all inputs — furniture, raw materials, sub‑contractor charges, and overheads.
  • Pure design consultancy (no material): Taxable at 18% under SAC 9983 (Other professional, technical and business services). The consultant charges GST only on the design fee and can claim ITC on business expenses like software, office rent, and laptops.
  • Interior decoration / styling (advisory only, no material): Also 18% under SAC 9983.

  The rate is uniform at 18% in all cases; only the SAC code and ITC treatment differ. Post‑GST 2.0 (September 2025), the 12% slab has been abolished, confirming 18% as the sole rate for interior design services.

• What is the GST rate for interior contractors? +

  The GST rate for interior contractors is 18% (9% CGST + 9% SGST for intra‑state; 18% IGST for inter‑state) under SAC 9954 (works contract). This applies to all interior contract work — false ceiling, flooring, carpentry, electrical, plumbing, painting, and modular kitchen installation. The contractor charges 18% on the total contract value (including both material and labour) and can claim full Input Tax Credit on:

  • Plywood, laminates, paint, hardware, tiles, electrical fittings
  • Furniture supplied and installed as part of the project
  • Sub‑contractor invoices
  • Equipment and tools used for the project

  If the contractor provides only labour (no material) to a residential homeowner, the service is exempt under Notification No. 12/2017‑CT(R) Entry 10. For commercial clients, even pure labour is taxable at 18%. The place of supply is the location of the immovable property (Section 12(3) of the IGST Act).

• Is GST registration mandatory for interior designers? +

  Yes, GST registration is mandatory for interior designers under the following circumstances:

  • Turnover exceeds ₹20 lakh: Under Section 22 of the CGST Act, registration is compulsory when aggregate annual turnover (all design fees, contract receipts, and other taxable supplies) exceeds ₹20 lakh (₹10 lakh in special category states like Uttarakhand, Himachal Pradesh, and North‑Eastern states).
  • Inter‑state supplies: Under Section 24, any designer providing services across state borders must register regardless of turnover. For example, a designer in Delhi taking up a project in Noida (Uttar Pradesh) must register even if annual turnover is ₹5 lakh.
  • Voluntary registration: Even if turnover is below the threshold, registration is highly advisable. It enables ITC claims on materials, furniture, software, office rent, and sub‑contractor charges. Many corporate clients and builders also require a GSTIN before awarding contracts.

  Freelance interior designers follow the same rules — registration is mandatory if turnover exceeds ₹20 lakh. Below the threshold, they may operate without GST, but voluntary registration is beneficial for professional credibility and ITC.

  The registration process is online via www.gst.gov.in. Documents required: PAN card, Aadhaar card, proof of business address (rent agreement or electricity bill), bank account details, and passport‑size photograph. Processing typically takes 3–7 working days. For professional assistance, refer to our GST registration service.

• What is GST on turnkey interior projects? +

  A turnkey interior project — where the designer or contractor handles everything from design concept to procurement, execution, and final handover — is a works contract taxable at 18% GST under SAC 9954 (Construction services). GST is charged on the entire project value, including design fees, material costs, and labour charges. The contractor cannot split the invoice into separate goods and services components; it is a single composite supply.

  Key features:

  • Full ITC available: The contractor can claim ITC on furniture, raw materials (plywood, paint, hardware, tiles, glass, stone), sub‑contractor bills, and all other project‑related inputs.
  • No separate billing: The entire contract is one taxable service. Billing materials separately as goods is incorrect and can lead to demand notices.
  • Example: A turnkey office interior project valued at ₹50,00,000 (all‑inclusive). GST @18% = ₹9,00,000. Total invoice = ₹59,00,000. The contractor claims ITC on purchases (e.g., furniture GST ₹8,00,000 + materials GST ₹4,00,000). Net GST payable to the government = ₹9,00,000 minus ₹12,00,000 ITC = excess ITC carried forward or refunded.
  • The corporate client (if GST‑registered) can claim ITC on the ₹9,00,000 GST charged by the contractor, creating a seamless credit chain.
• Can interior designers claim ITC? +

  Yes, interior designers providing taxable works contract or consultancy services can claim Input Tax Credit under Section 16 of the CGST Act on all goods, services, and capital goods used in the course or furtherance of business. Eligible ITC includes:

  • Furniture and fixtures: Sofas, chairs, tables, modular units, beds — purchased for client projects and installed on‑site.
  • Raw materials: Plywood (18%), laminates (18%), paint (18%), hardware (18%), tiles (18%), electrical fittings (18%), glass and stone (18%), sanitary ware (18%).
  • Capital goods: Laptops, design software (AutoCAD, SketchUp, 3ds Max), 3D printers, office furniture, projectors.
  • Input services: Sub‑contractor charges, architect/engineer fees, office rent (18%), telephone and internet bills, travel for site visits (if proper GST invoices are obtained), marketing and advertising expenses.
  • RCM payments: GST paid under Reverse Charge on GTA (goods transport) services at 18% with ITC, or advocate fees at 18%.

  ITC is BLOCKED under Section 17(5) for:

  • Construction or renovation of the designer's own office, studio, or home (own‑use immovable property).
  • Personal expenses — food, beverages, personal vehicle, club memberships.
  • Goods and services used for exempt supplies (e.g., pure labour contracts for residential homeowners under Notification 12/2017‑CT(R)).

  Practical check: Before claiming ITC, ask — "Is this expense for a client project (ITC available) or for my own use (ITC blocked)?" All ITC claims must be matched with GSTR‑2B; claims beyond GSTR‑2B attract automatic demand under Rule 36(4).

• What is GST on renovation and remodeling services? +

  Renovation, remodelling, and repair of existing interior spaces — whether residential or commercial — are works contracts under Section 2(119) of the CGST Act and attract 18% GST. This includes:

  • Repainting of walls, ceilings, and woodwork
  • Flooring replacement (tiles, wood, vinyl, carpet)
  • Bathroom and kitchen remodelling
  • False ceiling repair and replacement
  • Electrical and plumbing renovation

  Residential exemption: Under Notification No. 12/2017‑CT(R) Entry 10, pure labour contracts for a single residential unit are exempt from GST — but only if the contractor provides no material whatsoever. If even minor materials like paint, hardware, or consumables are supplied by the contractor, the entire contract becomes taxable at 18%.

  Commercial renovation: For offices, shops, hotels, and other commercial properties, renovation is always taxable at 18% — even if the contractor provides only labour. The commercial client (if GST‑registered) can claim ITC on the 18% GST charged.

  Example: A hotel hires a contractor to renovate 10 bathrooms. The contractor supplies tiles, sanitary fittings, and labour. Total contract = ₹8,00,000. GST @18% = ₹1,44,000. Total invoice = ₹9,44,000. The hotel (if registered) can claim ITC on ₹1,44,000.

• Which SAC code should interior designers use? +

  The correct SAC code depends on the nature of the supply:

  Nature of Supply	SAC Code	Description
  Turnkey / works contract (design + material + execution)	9954	Construction services — use sub‑codes like 995411 (residential), 995412 (non‑residential/commercial) as applicable
  Pure design consultancy (no material)	9983	Other professional, technical and business services — includes architectural and interior design services
  Interior decoration / styling (advisory only)	9983	Same as pure consultancy
  Furniture supply with installation	9954	Treated as works contract
  Standalone furniture sale (no installation)	HSN 9403	Goods — not a service. Use HSN code, not SAC.

  Using the correct SAC/HSN code is critical because it determines the applicable GST rate, enables correct return filing, and ensures the client's ITC is not blocked due to misclassification. When in doubt, for any project involving both design and material execution, use SAC 9954.

• Is GST applicable on freelance interior designers? +

  Yes, GST is applicable on freelance interior designers. The rules are exactly the same as for any interior design firm:

  • If aggregate annual turnover exceeds ₹20 lakh: Registration is mandatory under Section 22. The freelancer must charge 18% GST on all invoices (SAC 9983 for pure consultancy, SAC 9954 if materials are supplied).
  • If turnover is below ₹20 lakh: GST is not mandatory. The freelancer can operate without registration and does not charge GST to clients.
  • Voluntary registration: Even if below the threshold, voluntary registration is beneficial. It allows the freelancer to claim ITC on software subscriptions (AutoCAD, SketchUp), laptops, internet, office supplies, and travel. Many corporate clients also prefer working with GST‑registered freelancers.
  • Pure labour for residential clients: If a freelance designer provides only supervision/labour (no material) to a homeowner, the service may be exempt under Notification 12/2017‑CT(R).

  Freelancers earning income from international clients (export of services) should carefully evaluate whether their services qualify as a zero‑rated supply under Section 16 of the IGST Act, which allows export without GST payment and enables ITC refund.