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Interior design has always been seen as a luxury in India, but over the past decade it has evolved into a necessity for homeowners, builders, and businesses. As cities expand and lifestyles become more modern, families and professionals want homes and offices that not only look beautiful but also function efficiently. At the same time, one of the biggest challenges has been the cost of interiors. From modular kitchens and designer lighting to premium flooring and furniture, the overall investment can sometimes equal or even exceed the cost of the property itself.
This is where Goods and Services Tax (GST) plays a critical role. Every element of an interior project — whether it is raw materials like cement and plywood, finished items like sofas and curtains, or services like design consultancy and installation — is subject to GST. When the GST rate is high, the total project cost increases significantly, discouraging many middle-class homeowners from investing in quality interiors. Conversely, when GST is rationalized and reduced, interiors become more affordable, the industry sees more demand, and the overall ecosystem benefits.
The Government of India’s recent reforms under GST 2.0 simplified the tax slabs and reduced GST rates on many items linked to interiors. This change has created a ripple effect in the real estate and design industry, benefiting not only consumers but also architects, contractors, furniture makers, and even local artisans. In this blog, we will explore in detail the benefits of GST reduction on interiors, looking at how it impacts different stakeholders, how it shapes consumer behavior, and how it supports the broader economy.
The first and most obvious benefit of GST reduction is the direct impact it has on homeowners’ budgets. For an average Indian family buying a new apartment, interiors often account for anywhere between 10% to 40% of the total property cost. With earlier GST rates as high as 28% on many interior products, even a modest ₹10 lakh interior project could incur an additional tax burden of nearly ₹2.8 lakh. This often forced families to either compromise on design quality or postpone the work altogether.
With GST now reduced to 18% for most items and as low as 5% for select categories, the savings are substantial. For the same ₹10 lakh project, the tax component has fallen by ₹1 lakh or more. This means that homeowners can either save money or reinvest that amount into better materials, smarter furniture, or additional upgrades.
More importantly, affordability also boosts consumer confidence. Many families who earlier saw interiors as an optional expense now see it as an attainable goal. As a result, the demand for interior design services is expanding from metro cities like Delhi, Mumbai, and Bangalore into Tier 2 and Tier 3 cities such as Indore, Kochi, and Jaipur. This democratization of design ensures that good interiors are no longer reserved only for luxury buyers.
Another hidden benefit of GST reduction is the increase in renovation projects. In India, many homeowners delay upgrading their interiors because of the high costs involved. Kitchens that are 20 years old, bathrooms that feel outdated, and living rooms that lack modern storage solutions often go untouched because families prefer to save money.
With GST cuts, renovation becomes more affordable. For example, replacing bathroom fittings or upgrading to modular kitchens is now far less expensive than it was a few years ago. This shift encourages more homeowners to invest in renovation and remodeling, which keeps the interior industry buzzing with continuous demand, instead of relying only on new property buyers.
Renovation projects also create opportunities for small contractors, carpenters, and local artisans, ensuring that the benefits of GST reduction are spread across the supply chain rather than being concentrated only among big developers or luxury firms.
For interior designers and firms, GST reduction is nothing short of a game-changer. The interior design profession often struggled to convince clients about value because many customers compared professional services with cheaper, informal alternatives. Now that the overall project cost has come down, clients are more willing to hire professional designers, knowing that their budgets can stretch further.
This is particularly beneficial for small and medium-sized interior firms, who can now pitch to a broader customer base. Startups specializing in modular kitchens, bespoke furniture, or turnkey interiors are witnessing an increase in inquiries. For established firms, reduced GST has opened up new opportunities in the mid-range market, allowing them to serve not only luxury clients but also middle-income households.
Additionally, lower GST has simplified cash flow for businesses. Designers often face delays in payments because clients are hesitant to pay high GST bills upfront. With reduced rates, transactions are smoother, and designers are able to focus on creativity rather than financial negotiations.
Furniture and décor items form a major chunk of any interior project, and they were among the hardest hit by high GST in the past. From sofas and beds to curtains, carpets, and decorative lights, most of these items used to carry a GST rate of 28%. For many buyers, this made branded or customized furniture unaffordable, pushing them towards cheaper, unorganized market alternatives.
The reduction of GST to 18% (and in some cases to 5%) has brought down prices significantly. Customers now feel more confident investing in higher-quality furniture that lasts longer and adds more value to their homes. For Indian furniture brands and showrooms, this is a welcome change because they can now compete more effectively with international imports.
Décor items like paintings, handicrafts, and lighting fixtures have also become more affordable, which encourages homeowners to personalize their spaces instead of sticking only to functional furniture. This not only enhances the aesthetic quality of interiors but also supports local artists and craftsmen who produce unique, handcrafted décor.
On affordability for homeowners
“The reduction in GST has made interior design far more accessible to middle-class families. What was once considered a luxury is now a realistic investment for many homeowners.” – Ravi Menon, Interior Consultant
Imagine a young couple buying a 2BHK apartment in Pune. Their initial interior estimate was ₹12 lakh, but GST at 28% would have added nearly ₹3.3 lakh extra. After the reduction to 18%, the same project now adds only ₹2.1 lakh in tax. That’s a direct saving of ₹1.2 lakh — enough to upgrade their kitchen appliances or invest in a better sofa set. This saving turns a stressful budget into an exciting upgrade opportunity.