Looking for expert help with Income tax and GST for interior designers? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Interior design fees attract 18% GST (SAC 998391, Notification 11/2017-Central Tax (Rate), S. No. 21(ii)). The September 2025 rate changes didn't touch this rate.
- The place of supply is the state where the property is, so a project in another state is billed with IGST (Section 12(3)(a), IGST Act).
- Interior decoration is a profession under Section 44AA(1), so you can use Section 44ADA: 50% of gross receipts as income, up to Rs 75 lakh of receipts if cash is within 5%.
- Design fees face 10% TDS under Section 194J; execution contracts are usually under Section 194C at 1% or 2%.
- Clients can't claim input tax credit on capitalised fit-out work (Section 17(5)(c), CGST Act). Say so in your quote to business clients.
What tax does an interior designer pay in India? Interior design fees carry 18% GST once turnover crosses Rs 20 lakh (Section 22, CGST Act). For income tax, interior decoration is a profession under Section 44AA(1) of the Income-tax Act 1961. For AY 2026-27 you can declare 50% of gross receipts as income under Section 44ADA, if receipts are within Rs 50 lakh, or Rs 75 lakh where cash is within 5%.
An interior designer usually earns two kinds of money: a fee for the design, and the margin on getting it built. The tax law treats them differently. The design fee is professional income, taxed at 18% Goods and Services Tax (GST), with 10% Tax Deducted at Source (TDS) from company clients. Turnkey execution is closer to a works contract, with a different TDS section and a different income tax route. This guide covers how each is taxed for AY 2026-27 (FY 2025-26), what to put on the invoice, and where studios lose money.
Are you a professional or a contractor?
Most of your tax choices follow from this question. The Income-tax Act doesn't draw a bright line between an interior decorator and a fit-out contractor. It depends on what you actually supply.
Put the two on separate invoice lines, or separate contracts, when you do both. It keeps the TDS section right on your client's side, and it keeps your Section 44ADA receipts clean.
What GST rate applies to your invoices?
Comparison
GST on What Interior Designers Bill
| What you bill | Classification | GST rate |
|---|---|---|
| Interior design fee, concept drawings, 3D views, supervision | SAC 998391, heading 9983 | 18% |
| Turnkey fit-out that becomes part of the property (false ceiling, flooring, fixed wardrobes, electrical and plumbing work) | Works contract, heading 9954 | 18% |
| Loose furniture, lights, curtains or decor items sold as goods on a separate line | HSN of each item | Rate for that item |
| Composition scheme under Section 10(2A), turnover within Rs 50 lakh, no inter-state supplies | Any of the above | 6% of turnover, no GST charged on the bill |
Source: Notification 11/2017-Central Tax (Rate), S. No. 3(xii) and 21(ii), as amended by Notification 15/2025-Central Tax (Rate); Section 2(119) and Section 10(2A), CGST Act; Notification 2/2019-Central Tax (Rate)
A works contract under Section 2(119) of the CGST Act includes "fitting out" and "renovation" of immovable property where goods pass to the client. That is the legal home of most turnkey interior jobs. The general works contract entry, S. No. 3(xii), stayed at 18% after the GST 2.0 changes of 22 September 2025.
Which state's GST? Section 12(3)(a) of the IGST Act names interior decorators among the services directly in relation to immovable property. The place of supply is where the property is, not where your client or studio is.
Say your studio is in Hyderabad and you charge a design fee of Rs 3,00,000:
- Flat in Hyderabad: CGST Rs 27,000 + SGST Rs 27,000. Invoice total Rs 3,54,000.
- Flat in Bengaluru: IGST Rs 54,000. Same total, but it's an inter-state supply. Charging CGST and SGST by mistake means paying the right tax again and claiming a refund of the wrong one.
When do you need GST registration?
Registration is required once aggregate turnover crosses Rs 20 lakh in a financial year, or Rs 10 lakh in Manipur, Mizoram, Nagaland and Tripura (Section 22, CGST Act). The higher Rs 40 lakh limit is only for suppliers of goods, so it doesn't help a design studio. Out-of-state projects don't force early registration: Notification 10/2017-Integrated Tax exempts inter-state service suppliers below the same limit. Our GST registration service handles the application.
Regular scheme or composition?
Under Section 10(2A) of the CGST Act, a service provider whose turnover in the previous year was within Rs 50 lakh can pay 6% (3% CGST + 3% SGST) on turnover. You can't charge GST on the bill, can't claim input tax credit (ITC) and can't make inter-state supplies.
Take a Rs 10 lakh design fee from a homeowner. On the regular scheme you bill Rs 11,80,000; the homeowner can't claim the Rs 1,80,000 GST back. On composition you bill Rs 10,00,000 and pay Rs 60,000 yourself. That's a real price edge for homeowner-heavy studios.
It stops working when:
- Clients are businesses. Offices, clinics and showrooms want a tax invoice. Your design fee is credit they can use.
- You take one project in another state. That's an inter-state supply, and the scheme is off.
- You buy a lot with GST. Software licences, rent and subcontracted work carry GST you can no longer offset.
See our composition scheme guide for the full conditions.
What does your business client need to know about ITC?
Section 17(5)(c) of the CGST Act blocks ITC on works contract services for construction of immovable property. The Explanation to Section 17(5) says construction includes renovation, additions and alterations, to the extent they're capitalised. A company that capitalises a Rs 20 lakh office fit-out pays Rs 3,60,000 GST it can't claim.
Two points help you here:
- Your own subcontracts. The block doesn't apply where the works contract is an input service for a further works contract supply. When you subcontract carpentry or false ceiling work for a turnkey job, you can claim that GST.
- Tell the client up front. A client who expected Rs 3,60,000 of credit and then finds it blocked is the client who doesn't come back. Put the ITC position in the quote.
For more on how works contracts are taxed, see our works contract GST guide.
Which TDS section will your clients use?
For FY 2025-26, under the Income-tax Act 1961:
- Section 194J (design and advice): "professional services" in Section 194J expressly includes interior decoration. Clients deduct 10% once fees cross Rs 50,000 in the year.
- Section 194C (execution): a contract to carry out the work is usually a works contract. Clients deduct 1% if you're an individual or HUF, 2% if you're a firm or company. This applies once a single payment crosses Rs 30,000 or the year's total crosses Rs 1,00,000.
- Homeowners: an individual paying for their own home isn't covered by Sections 194J or 194C. Section 194M applies only above Rs 50 lakh in a year, at 2%.
TDS is worked out on the fee before GST when the invoice shows GST separately (CBDT Circular 23/2017). From 1 April 2026 (FY 2026-27), both deductions sit under Section 393 of the Income-tax Act 2025; see our Section 393 TDS guide. Check Form 26AS every quarter. A client who deducted but didn't deposit is your most common reason for a short credit.
How is your income taxed for AY 2026-27?
Section 44ADA lets a resident individual or partnership firm (not an LLP) in a Section 44AA(1) profession declare 50% of gross receipts as income, without keeping books. Interior decoration is on that list. The limit is Rs 50 lakh of receipts, or Rs 75 lakh where cash receipts are within 5% of the total. You can declare more than 50%.
Example (design studio, new regime): fees of Rs 40 lakh for the year, excluding GST, all received by bank transfer. Rs 30 lakh came from company clients who deducted 10% TDS.
- Income under Section 44ADA: 50% of Rs 40 lakh = Rs 20,00,000.
- Tax on the FY 2025-26 new regime slabs: Rs 20,000 (Rs 4-8 lakh at 5%) + Rs 40,000 (Rs 8-12 lakh at 10%) + Rs 60,000 (Rs 12-16 lakh at 15%) + Rs 80,000 (Rs 16-20 lakh at 20%) = Rs 2,00,000.
- No Section 87A rebate above Rs 12 lakh. Add 4% cess of Rs 8,000. Tax: Rs 2,08,000.
- TDS credit: 10% of Rs 30 lakh = Rs 3,00,000. Refund due: Rs 92,000, assuming no other income.
A studio with little TDS pays advance tax instead. Under Section 44ADA you can pay the whole year's advance tax in one instalment by 15 March (Section 211(1)(b)).
Step-by-Step Guide
Before You File Your ITR as an Interior Designer
Split your receipts
Separate design fees from execution contracts. Only professional receipts go into Section 44ADA. Section 44AD can't be used for income from a Section 44AA(1) profession.
Check the Section 44ADA limit
Rs 50 lakh of gross receipts, or Rs 75 lakh if cash receipts are within 5%. Keep GST out of the figure if you account for it separately.
Declaring less than 50%?
You need books under Section 44AA, and a tax audit under Section 44AB(d) if your income is above the basic exemption limit.
Match TDS
Tie every client's 194J and 194C deduction to Form 26AS before filing, and chase any that are missing.
Pick the form
ITR-4 for Section 44ADA if total income is within Rs 50 lakh and other conditions are met; ITR-3 if you file on books or your income is higher.
Source: Sections 44AA, 44AB, 44AD, 44ADA, 87A and 211, Income-tax Act 1961; Finance Act 2025
If you file on books, professional receipts above Rs 50 lakh need a tax audit under Section 44AB(b). Turnkey execution is business income, audited under Section 44AB(a) above Rs 1 crore of turnover, or Rs 10 crore if cash receipts and cash payments are each within 5%. See our Section 44ADA guide and our income tax guide for architects, whose rules largely match yours.
Common mistakes interior designers make
- One lump-sum invoice for design and execution. The client then has to guess between 194J and 194C, and your Section 44ADA receipts get mixed with contract money.
- CGST and SGST on an out-of-state flat. The place of supply is the property's state. It's IGST.
- Choosing composition, then taking a project in another state. One inter-state supply breaks the Section 10(2A) conditions.
- Promising a business client full ITC on fit-out. Capitalised works contract services are blocked under Section 17(5)(c).
- Putting material reimbursements in Section 44ADA receipts. Contract money for materials can push you past the Rs 75 lakh limit. Keep it on a separate contract and discuss the treatment with your CA.
How Tax Garden helps interior designers
We register you for GST, set up invoice formats that split design fees from execution with the right place of supply, and file GSTR-1 and GSTR-3B; see our GST return filing service. We reconcile client TDS against Form 26AS and file your ITR under Section 44ADA or on books through our ITR filing service. Plans are on our pricing page.
