An interior designer in India charges GST at 18% on almost everything they bill: the design fee (SAC 998391) and a turnkey job where you supply material and execute on site (a works contract under SAC 9954). The rate is rarely where things go wrong. The trouble starts with three other questions: which state's GST applies, when tax is due on a client's advance, and which purchase bills give you input tax credit.
Take a typical case. A client pays you ₹4,72,000 on 10 December to start a showroom fit-out in Pune, and your studio is registered in Gujarat. By the end of this post you should know whether that receipt carries CGST and SGST or IGST, which month's GSTR-3B it belongs to, and how to adjust it when you raise the stage bill in January.
This guide is written for studios that do design, execution, or both. It assumes you are registered and file GSTR-1 and GSTR-3B every month or quarter.
Is interior work a works contract under GST?
It depends on what the contract says you will do. Section 2(119) of the CGST Act defines a works contract as a contract for building, fitting out, improvement, renovation, alteration or installation of any immovable property, where transfer of property in goods is involved in executing it. Two conditions matter: you supply material, and the result becomes part of the building.
A false ceiling, a built-in wardrobe, wall panelling, a modular kitchen fixed to the wall, flooring and painting all fit that description. Schedule II of the CGST Act treats a works contract as a supply of services, so you do not split it into a goods portion and a labour portion. The whole contract value is taxed as one service.
Loose items are different. A sofa, a dining table, curtains or a floor lamp that you buy and deliver without fixing them to the structure are goods. They are billed under their own HSN code at the rate notified for that item.
What GST rate applies to each type of interior billing?
After the rate changes that took effect on 22 September 2025, the general rate for works contracts under heading 9954 stays at 18%, and so does the rate for interior design consultancy. Most wooden and modular furniture under HSN 9403 also remains at 18%, though some items, such as furniture made wholly of bamboo or cane, were moved to a lower rate. Check the HSN of each loose item rather than assuming.
What you bill | How GST treats it | Code | Rate |
|---|---|---|---|
Design fee, drawings, 3D views, site supervision only | Service | SAC 998391 | 18% |
Turnkey fit-out: design, material and execution in one contract | Works contract (service) | SAC 9954 | 18% |
Execution with your material under a separate contract | Works contract (service) | SAC 9954 | 18% |
Loose furniture and decor delivered, not fixed | Goods | HSN of the item, e.g. 9403 | Item rate (mostly 18%) |
Because nearly every line lands at 18%, splitting one contract into several invoices no longer saves tax. Split invoices only when the contract itself is split, for example when the client signs a design agreement first and a separate execution agreement later. Use the correct SAC on each line all the same. A wrong SAC does not change the tax, but it shows up in your GSTR-1 HSN summary and invites questions.
Which state's GST applies when the site is in another city?
This is where most interior studios get it wrong. For most services, the place of supply follows the client's location. Services related to immovable property follow a special rule. Section 12(3) of the IGST Act says the place of supply for services directly in relation to an immovable property, including services provided by architects and interior decorators, is the location of the property.
That covers your design fee as well as execution. The client's billing address does not decide it. The site address does.
Studio in Surat, flat in Vesu, client in Surat: place of supply is Gujarat. Charge CGST 9% and SGST 9%.
Studio in Surat, showroom in Pune, client billed at its Ahmedabad office: place of supply is Maharashtra because the showroom is there. Charge IGST 18%.
Studio in Surat, villa in Goa, client living in Surat: place of supply is Goa. Charge IGST 18%, even though both you and the client are in Gujarat.
The third case surprises people. Put the site address and the place-of-supply state on the invoice so your GSTR-1 and the client's records agree. If the property is outside India, the proviso to Section 12(3) shifts the place of supply to the client's location.
How is GST charged on advances and stage payments?
For services, GST is due on an advance when you receive it, not when the work is done. Section 13 of the CGST Act fixes the time of supply of services as the earlier of the invoice date (if issued on time) or the date you receive payment. The relief that removed GST on advances for goods does not cover services, and a works contract is a service.
When an advance comes in, issue a receipt voucher and report the tax in that month's GSTR-3B. When you later raise the tax invoice, adjust the tax already paid. For services, the invoice must be issued within 30 days of completing the supply under Rule 47 of the CGST Rules. A turnkey job that runs beyond three months with stage-wise payments is usually a continuous supply of services, and Section 31(5) then requires the invoice on or before each payment due date in the contract.
Worked example: advance and stage bill
Say you run an interior design studio in Surat (an example business). A client signs a turnkey contract for its showroom in Pune worth ₹16,00,000 plus GST. The site is in Maharashtra, so every bill on this job carries IGST. They pay an advance of ₹4,72,000 on 10 December, inclusive of tax.
Tax in the advance: ₹4,72,000 × 18 ÷ 118 = ₹72,000. Taxable value: ₹4,00,000.
December GSTR-3B: pay IGST ₹72,000 on the advance.
On 15 January you bill the first stage at ₹8,00,000. GST at 18% is ₹1,44,000, and the invoice total is ₹9,44,000.
Against this invoice, adjust the advance: tax still payable is ₹1,44,000 − ₹72,000 = ₹72,000. The client owes ₹9,44,000 − ₹4,72,000 = ₹4,72,000 more.
January GSTR-3B: pay the balance IGST of ₹72,000.
Total tax on the stage across the two months is ₹1,44,000, which is what it should be. The common mistake is to treat the advance as a loan in the books, pay nothing in December, and then pay ₹1,44,000 in January with interest exposure for the late month.
Can an interior designer claim ITC on plywood, hardware and subcontractors?
Yes, in most cases. Section 17(5)(c) blocks credit on works contract services used for construction of immovable property, but it carves out an exception where the works contract is an input service for a further supply of works contract service. That is exactly your position when you hire a carpenter firm, a false ceiling contractor or an electrical subcontractor for a client's turnkey job. Section 17(5)(d) blocks goods and services for construction on your own account, and a client's site is not your own account.
So GST on plywood, laminates, hardware, paint, lighting and subcontractor bills used in client projects is available, subject to the usual Section 16 conditions: you hold a valid tax invoice, the supplier has reported it so it appears in your GSTR-2B, and you have received the goods or services.
Credit is blocked when you fit out your own studio and capitalise it as part of the building. Your business clients face the same block on interiors they capitalise, which is one reason they ask whether you bill design and execution separately. Our guide to blocked ITC under Section 17(5) covers the full list.
What should an interior designer's GST invoice show?
Beyond the standard fields under Rule 46, interior invoices need a few extra details to hold up when a client's accountant or a GST officer reads them:
SAC 998391 for design lines and SAC 9954 for works contract lines, with HSN codes for any loose goods.
The site address and the place-of-supply state, separate from the client's billing address.
The client's GSTIN, so the client's ITC flows through GSTR-2B.
The stage or milestone the invoice covers, matching the contract.
The receipt voucher number and tax already paid on any advance being adjusted.
If your aggregate turnover crosses ₹5 crore in any year, these invoices must also be reported for an IRN as e-invoices. Most studios are below that, but larger turnkey firms cross it faster than they expect because material value counts in turnover.
Month-end routine for an interior studio
List every advance received during the month and confirm a receipt voucher exists for each.
Raise stage invoices due under contracts, and adjust advances against them.
Check the place of supply on every invoice against the site address, not the billing address.
Enter purchase bills from material suppliers and subcontractors, tagged to the client project in the narration.
Reconcile purchases with GSTR-2B and chase suppliers whose bills are missing before you claim credit.
File GSTR-1, then GSTR-3B with output tax net of the reconciled ITC.
Where hisabkitab fits in
hisabkitab's custom invoicing lets you set up a branded invoice with SAC and HSN on each line, so design fees, works contract lines and loose furniture sit on the right codes without retyping them every time. GSTR-1 and GSTR-3B are prepared from those invoices, and GSTR-2B is reconciled against your purchase register with AI, flagging wrong GSTINs and duplicate bills from suppliers.
Plywood and hardware bills can be read straight from photos or PDFs with OCR, and WhatsApp payment reminders help when a client sits on a stage payment. The interior designers page shows how studios set it up.
Frequently asked questions
What is the GST rate for interior design services in India?
Interior design and decoration services are taxed at 18% under SAC 998391. A turnkey contract where you also supply material and execute on site is a works contract under SAC 9954, also at 18%.
Is interior work a works contract under GST?
Yes, when you supply material and the work becomes part of the building, such as false ceilings, built-in wardrobes or fixed modular kitchens. Section 2(119) of the CGST Act covers it, and it is taxed as a service.
Do interior designers need GST registration?
Registration is required once aggregate turnover crosses ₹20 lakh in a financial year, or ₹10 lakh in special category states. Many studios register earlier because business clients want an invoice they can claim credit on.
Which state's GST applies if the project site is in another state?
The location of the property decides it under Section 12(3) of the IGST Act, including for design fees. If the site is in a different state from your registration, charge IGST.
Is GST payable on advance received from an interior design client?
Yes. For services, tax is due when the advance is received. Issue a receipt voucher, pay the tax in that month's GSTR-3B, and adjust it in the final invoice.
Can an interior designer claim ITC on materials and subcontractors?
Yes, when they are used for a client's works contract. Section 17(5) blocks credit only for construction on your own account, such as fitting out your own studio.
Start a free trial of hisabkitab or compare plans to set up GST-ready invoicing for your interior studio.
