Turnkey is where Indian interior studios make their real money, and it's also where their GST gets genuinely complicated. The moment you stop billing "design fee" and start billing "complete interiors, design to handover, one price", you've walked out of simple service taxation and into works contract territory, and the rules there are different enough that guessing will eventually cost you. I've sat with enough studio owners staring at a notice to want to write this down properly, so here's the plain-English version.
What a works contract actually is, in our world
Under GST, a works contract is a contract for building, fabrication, fitting out, improvement or similar work on immovable property, where goods and services are supplied together as one bundle. The law then does something helpful: it declares the whole thing a supply of services, taxed at 18%, no matter how much of the contract value is actually material.
Read that immovable property part again, because it's the hinge everything swings on. Your false ceiling, civil work, fixed partitions, wall panelling, built-in wardrobes that become part of the building, electrical and plumbing rework, all of that fits the definition when bundled into one contract. But a loose sofa, a dining table, freestanding furniture you supply, those are movable goods, and no amount of contract wording turns them into a works contract. They stay goods with their own HSN codes and rates, and if you want the deeper cut on that boundary I've written a full piece on GST on furniture supply versus design service.
So a real turnkey home project is often two things living inside one client relationship: a works contract for everything fixed to the property, and a supply of goods for everything that could be lifted and carried out the door.
The three ways studios structure turnkey, and what each means
| Structure | How it's billed | GST treatment |
|---|---|---|
| Pure works contract | One price, design + execution, all fixed to property | 18% as a service, one line |
| Split contract | Design fee separate, fixed works separate, loose furniture separate | 18% service + 18% works contract + goods at item rates |
| Everything as goods + small fee | Big material bill, token design fee | Risky, often misdeclared, invites scrutiny |
My honest advice is the split contract. It's a little more paperwork upfront, but every line is defensible, your client's accountant can see exactly what's what, and nobody has to argue later about whether a wardrobe was fixed or freestanding. The pure works contract is fine for genuinely integrated fit-outs, offices, restaurants, full renovations. The third structure, where a studio inflates the goods portion because someone told them it helps the client, please don't, the rate is 18% either way for most of it and the mismatch between your contract, your invoices and your returns is exactly the pattern the system flags.
The baseline rates conversation, including what pure design fees attract, is in my guide to the GST rate on interior design services if you need the foundation first.
The input tax credit trap your commercial clients care about
Here's something that will make you sound very sharp in a client meeting. When a business client gets your works contract invoice for fitting out their own office, their ability to claim input tax credit on it is restricted, because the law blocks credit on works contract services used for constructing immovable property on one's own account. There are exceptions, notably plant and machinery, and the position differs for someone who is themselves in the business of further supply, but the everyday effect is real: your 18% is often a cost to the client, not a pass-through.
Why does this matter to you as the designer? Two reasons. First, sophisticated clients will negotiate harder because they can't recover the tax, so build that into your pricing conversation early. Second, some clients will push you to restructure the paperwork to "help" them claim credit anyway, and that's their risk becoming your risk, because it's your GSTIN on the invoice. You can verify any vendor's or client's registration status on the official GST portal in about a minute, and I'd make that a habit for every new commercial engagement.
Meanwhile, your own credits as the contractor are healthy: GST you pay on plywood, hardware, laminates, subcontractor bills, all of it is creditable against your 18% output liability, provided your purchases are properly invoiced to your GSTIN. Studios buying material in cash at the local market are burning real, recoverable money, and I've laid out how to track that side cleanly in bookkeeping basics for an interior studio.
Filing-time hygiene for turnkey studios
A few habits that keep works contract studios clean at filing time, learned the annoying way:
Turnkey GST hygiene
- Write the contract so the scope on immovable property is clearly identified
- Bill loose furniture on separate lines with item HSN codes, never inside the works contract line
- Verify item rates through an HSN/SAC code lookup before the BOQ is signed, not after
- Charge GST on advances when received, turnkey advances are large and this one bites
- Keep every subcontractor and material invoice in your GSTIN so credits actually flow
- Reconcile books with returns quarterly, since GST data and the Income Tax portal get cross-checked
The advance point deserves one more sentence, because turnkey projects run on 40% and 50% advances. For services, and a works contract is a service, tax liability arises when you receive the money. A ₹20 lakh advance in March carries its GST in March's cycle even if the final invoice is months away, and missing that timing is one of the most common notices I hear about.
The operational fix: stop rebuilding the same numbers four times
Notice what every mistake above has in common: the same project numbers being re-created by hand in different places, the quote in Excel, the contract in Word, the invoice in Tally, the return on the portal. Four chances to diverge, and turnkey projects have hundreds of line items.
This is exactly the workflow Designa was built to collapse. You spec the project room by room with live costs, the client approves online, and the approved quote becomes a compliant GST invoice in one click, service lines under SAC, goods lines under their HSN, the CGST/SGST or IGST split handled from place of supply, series unbroken, then synced to Tally or Zoho Books for your CA. I walked through the mechanics in how to turn a quote into a GST invoice in minutes, and for a turnkey studio the honest payoff is that your contract, your invoice and your return finally tell the same story.
Frequently asked questions
What GST rate applies to turnkey interior projects?
Turnkey work on immovable property is a works contract, treated as a supply of services and taxed at 18%, whatever the material share inside it.
Is loose furniture part of a works contract?
No. Freestanding, movable furniture is a supply of goods with its own HSN code and rate, and it should be billed on separate lines even inside a turnkey engagement.
Can my client claim input tax credit on my turnkey invoice?
Usually not, when they're fitting out immovable property on their own account, credit is blocked for most such clients, with limited exceptions like plant and machinery. Their advisor should confirm their specific position.
Can I claim credit on materials I buy for a turnkey job?
Yes, GST paid on materials and subcontractors is creditable against your 18% output tax, as long as purchases are invoiced to your GSTIN.
Is GST payable on the advance for a turnkey project?
Yes, for services the liability arises on receipt of the advance, so a large turnkey advance carries GST in the month you receive it.
Works contracts reward studios that run tight paperwork and punish everyone else, that's really the whole story. If you'd like to see a turnkey project flow from spec to approved quote to GST invoice without the re-typing, the live demo is at demo.designa.work, and the founding offer, one flat price for your whole studio billed in rupees, is at go.designa.work.