GST for Interior Designers and Architects: How TaxBuddy Manages Milestone-Based Billing
- Rajesh Kumar Kar
- Jan 2
- 9 min read
Updated: Feb 9
Interior designers and architects in India are required to charge 18% GST on their professional and works contract services, with strict compliance around invoicing timelines. Most interior and architectural projects follow milestone-based billing, which falls under the continuous supply of services under GST. Each payment stage triggers a specific invoicing obligation, and missing timelines can lead to penalties or input tax credit issues for clients. Managing these requirements manually often leads to errors. TaxBuddy simplifies this process by aligning milestone billing with GST rules through automated invoice generation and seamless return filing.
Table of Contents
GST Applicability for Interior Designers and Architects in India
Interior designers and architects provide services that are taxable under GST when supplied for consideration in the course of business. These services are treated either as professional consultancy services or as works contract services, depending on the nature of the engagement. Pure design, planning, or architectural consultancy is treated as a supply of services. When design services are combined with execution involving materials and labour, the supply is classified as a works contract service under GST. In both cases, GST applies at the standard rate, and compliance obligations such as invoicing, return filing, and tax payment must be followed from the date GST registration becomes applicable.
GST Rate and SAC Codes for Interior Design and Architectural Services
Interior design and architectural services attract GST at the rate of 18%. Design consultancy, space planning, architectural drawings, and related advisory services are generally classified under SAC 998391. Interior execution projects involving both material and labour are treated as works contract services and fall under SAC 9954. The applicable GST rate remains 18% irrespective of whether the contract is billed as a lump sum or through milestones. Even when material prices change due to GST rate revisions, bundled interior contracts continue to attract GST at the service rate, not individual material rates.
Mandatory GST Registration Rules for Interior Designers and Architects
GST registration becomes mandatory once aggregate turnover exceeds ₹20 lakh in a financial year. For professionals providing interstate services, GST registration is required regardless of turnover. Architects and interior designers working with clients across states, corporate entities, or developers often cross this threshold early. Once registered, compliance becomes compulsory, including timely invoicing, monthly or quarterly return filing, and tax payment. Failure to register when required can lead to penalties, interest, and denial of input tax credit to clients.
Understanding Milestone-Based Billing Under GST
Milestone-based billing is common in interior and architectural projects where payments are linked to specific stages such as design approval, site execution progress, or project completion. Under GST, such billing arrangements are treated as a continuous supply of services. Each milestone triggers a tax liability, and GST must be charged on the amount linked to that stage. Even if the full project is not completed, GST becomes payable for each completed or payable milestone as per the contract terms.
Continuous Supply of Services and Its Impact on Project Invoicing
Continuous supply of services refers to services provided over a period where payment obligations arise periodically or on the completion of agreed milestones. Interior and architectural projects fall squarely within this definition. The timing of invoice issuance is critical under this framework. An invoice must be issued on or before the due date of payment, the date of receipt of payment, or the date of completion of the milestone, whichever occurs earlier. Missing this timing can result in interest, penalties, and compliance issues during audits.
Time Limits and Compliance Rules for Raising Milestone-Based GST Invoices
GST law requires milestone-based invoices to contain specific details, including service description, SAC code, GSTIN of both parties, taxable value, and tax breakup. Invoices must be issued strictly within the prescribed timelines for the continuous supply of services. Delayed invoicing can lead to late fees, interest on tax liability, and complications in return filing. Clients may also face input tax credit issues if invoices are not reported correctly in GST returns.
E-Invoicing Requirements for Interior Designers and Architects
E-invoicing becomes mandatory when aggregate turnover crosses the notified threshold for B2B supplies. Once applicable, every eligible invoice must be reported to the Invoice Registration Portal to generate an IRN and QR code. For interior designers and architects handling large corporate or developer projects, e-invoicing is often applicable. Non-compliance can result in invoices being treated as invalid for GST purposes, leading to tax and credit disputes.
Common GST Compliance Challenges in Milestone-Based Projects
Milestone-based projects often face challenges such as incorrect timing of invoices, a mismatch between contract terms and invoicing dates, incorrect turnover reporting, and reconciliation issues between GSTR-1 and GSTR-3B. Manual tracking of milestones increases the risk of errors, especially when multiple projects run simultaneously. These issues can attract scrutiny during assessments and delay refunds or input tax credit claims.
How TaxBuddy Manages Milestone-Based Billing for Interior Designers and Architects
TaxBuddy simplifies milestone-based GST compliance by aligning invoicing directly with contract milestones. The platform validates billing stages against GST rules, automatically generates compliant invoices, and syncs them with return filings. Turnover tracking, GST liability computation, and reconciliation are handled systematically, reducing the risk of mismatches and late filings. This structured approach helps interior designers and architects stay compliant without manual follow-ups.
Integration of GST Filings With Income Tax Compliance on TaxBuddy
GST turnover plays a direct role in income tax reporting, especially for professionals and firms. Discrepancies between GST returns and income tax filings often lead to notices. TaxBuddy integrates GST data with income tax compliance, ensuring turnover consistency, accurate reporting, and smoother assessments. This integration is particularly useful for professionals managing multiple projects with staggered billing.
Practical GST Compliance Checklist for Interior Designers and Architects
Confirm correct classification of services under applicable SAC codes Interior designers and architects must first identify whether the engagement is pure consultancy or a works contract involving material and labour. Design consultancy, drawings, supervision, and planning services generally fall under professional service SAC codes, while turnkey interior execution projects are classified as works contract services. Correct classification is essential because it determines invoicing structure, reporting, and compliance treatment during audits.
Apply the 18% GST rate consistently across consultancy and works contracts Both interior design consultancy services and bundled works contracts attract GST at 18%. The rate applies uniformly, even when contracts are broken into multiple milestones or when material costs fluctuate. Applying inconsistent rates across milestones or invoices can lead to mismatches in returns and disputes with clients during input tax credit claims.
Ensure GST registration once turnover thresholds or interstate conditions are met GST registration becomes mandatory when aggregate turnover exceeds ₹20 lakh in a financial year. Registration is also compulsory for professionals providing interstate services, regardless of turnover. Timely registration avoids penalties, ensures legal issuance of GST invoices, and protects clients’ ability to claim input tax credit.
Track milestones strictly as per contractual terms Milestones defined in client contracts directly impact GST liability. Each milestone must be tracked carefully to determine when tax becomes payable. Deviations between contract milestones and invoicing dates often lead to compliance gaps. Maintaining a milestone tracker aligned with contracts helps ensure timely invoicing and accurate tax reporting.
Issue invoices within prescribed timelines for the continuous supply of services Milestone-based projects fall under the continuous supply of services. GST invoices must be issued on or before the payment due date, date of receipt of payment, or date of milestone completion, whichever is earlier. Delayed invoicing can attract interest, late fees, and complications in GST return filing.
Verify e-invoicing applicability and comply where required E-invoicing applies when aggregate turnover crosses the notified threshold, and B2B supplies are made. Once applicable, invoices must be registered on the Invoice Registration Portal to generate IRN and QR codes. Failure to follow e-invoicing rules can render invoices invalid and disrupt tax compliance for both the service provider and the client.
Reconcile GST returns regularly to avoid mismatches Regular reconciliation between sales invoices, GSTR-1, and GSTR-3B helps identify discrepancies early. For interior designers and architects handling multiple projects and milestones, reconciliation ensures turnover consistency and prevents notices related to mismatches or incorrect tax payments.
Maintain proper documentation for audits and assessments Proper documentation includes contracts, milestone schedules, invoices, payment records, and GST returns. These records are essential during audits, assessments, or client disputes. Well-maintained documentation supports accurate compliance and reduces the risk of penalties during scrutiny.
Conclusion
GST compliance for interior designers and architects becomes complex when milestone-based billing is involved. Proper classification, timely invoicing, and accurate reporting are essential to avoid penalties and credit issues. Technology-driven compliance management significantly reduces these risks. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers both self-filing and expert-assisted plans. Self-filing is suitable for professionals with straightforward income and GST data who prefer platform-guided filing. Expert-assisted plans are designed for interior designers and architects dealing with milestone-based billing, GST–ITR reconciliation, multiple clients, or higher scrutiny risk. The flexibility allows users to switch plans based on complexity without changing platforms.
Q. Which is the best site to file ITR?
The best site to file an income tax return is one that ensures accuracy, compliance with current tax laws, and reliable post-filing support. For professionals like interior designers and architects, this also includes proper alignment between GST turnover and income tax reporting. Platforms that combine automated checks with expert validation help reduce errors and minimise the risk of notices or mismatches.
Q. Where to file an income tax return?
Income tax returns can be filed through authorised online platforms that are integrated with the Income Tax Department’s portal. Such platforms allow electronic filing, verification, and tracking of returns. Using a platform that also integrates GST data helps professionals maintain consistency between indirect tax filings and income tax disclosures.
Q. What GST rate applies to interior designers and architects?
Interior design and architectural services are taxable at 18% GST. This rate applies to pure consultancy services such as design planning, drawings, and supervision, as well as bundled works contracts involving material and labour. The rate remains the same regardless of whether billing is done as a lump sum or through milestones.
Q. How is milestone-based billing treated under GST?
Milestone-based billing is treated as a continuous supply of services under GST. Each milestone agreed in the contract represents a separate trigger for tax liability. GST becomes payable as soon as a milestone is completed, payment becomes due, or payment is received, whichever occurs first. This treatment ensures tax is paid progressively rather than at project completion.
Q. When should a GST invoice be issued for a milestone?
A GST invoice for a milestone must be issued on or before the earliest of three events: the due date mentioned in the contract, the date of receipt of payment, or the date on which the milestone is completed. Issuing invoices outside this timeline can lead to interest, penalties, and return mismatches.
Q. Is GST registration mandatory for architects?
GST registration becomes mandatory once aggregate turnover exceeds ₹20 lakh in a financial year. Additionally, architects providing interstate services must register under GST irrespective of turnover. Once registered, all compliance requirements, such as invoicing, return filing, and tax payment, apply from the effective date of registration.
Q. Does e-invoicing apply to interior designers?
E-invoicing applies when aggregate turnover exceeds the notified threshold, and B2B supplies are made. In such cases, invoices must be reported to the Invoice Registration Portal to generate an IRN and QR code. Failure to comply can result in invoices being treated as invalid for GST purposes.
Q. What happens if milestone invoices are delayed?
Delayed milestone invoices can result in interest on unpaid tax, late fees, and penalties. Clients may also face difficulties claiming input tax credit if invoices are not reported correctly or on time. Repeated delays increase the risk of scrutiny during GST audits and assessments.
Q. Are materials taxed separately in interior contracts?
When materials and services are supplied together as part of a works contract, GST is charged at 18% on the entire contract value. Individual material rates are not applied separately in such cases. Only pure material supply contracts are taxed based on the applicable GST rate of the goods involved.
Q. Can GST data affect income tax compliance?
Yes, GST turnover data directly impacts income tax reporting. Differences between GST returns and income tax disclosures often trigger notices or inquiries. Consistent reporting across both tax systems is essential for professionals with milestone-based billing and multiple projects.
Q. Is TaxBuddy suitable for small design firms and freelancers?
TaxBuddy is suitable for freelancers, small firms, and established design practices. The platform supports GST compliance, milestone-based invoicing, and income tax filing in an integrated manner. This makes it especially useful for professionals managing multiple clients, staggered payments, and evolving compliance requirements.
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