Tax for carpenters in India

Carpentry is a business, so use presumptive Section 44AD (6 percent digital, 8 percent other), not the 50 percent professional scheme under 44ADA. GST registration applies at Rs 20 lakh of service turnover, works-contract and wooden furniture are generally 18 percent with input credit, and a business that subcontracts to you deducts 194C TDS (1 percent for individuals).

Presumptive + GST + TDS at a glance

Presumptive taxation

Section:: Sec 44AD
Deemed profit rate:: 6 percent on digital receipts / 8 percent on other receipts
Classification:: business

GST treatment

Slab:: 18%
SAC:: 9954 works-contract / HSN 9403 furniture
Composition eligible:: Yes
Reverse charge (RCM):: Not applicable

TDS exposure

Last reviewed: 29 May 2026

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Carpentry in India is a business, so the natural presumptive route is Section 44AD (a deemed 6 percent of digital receipts or 8 percent of other receipts), not the 50 percent professional scheme under Section 44ADA, which does not apply to trades. GST registration is required at Rs 20 lakh of service turnover, works-contract and made-to-order furniture are generally taxed at 18 percent with input credit on timber and fittings, and a business that engages you as a subcontractor deducts TDS under Section 194C.

What business structure do carpenters use?

The common patterns for carpenters are: Sole proprietor, simplest, suits most carpenters on presumptive 44AD, Partnership or LLP, where carpenters share a workshop, capital and liability, Private limited, for furniture units at scale wanting limited liability. The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

Section 44AD is the right scheme for carpenters

A carpenter runs a business, not a notified profession, so presumptive taxation is under Section 44AD: a deemed 8 percent of turnover, or 6 percent on receipts taken digitally, with no detailed books or audit within the limits. The 50 percent scheme under Section 44ADA is only for specified professionals and does not apply. The 44AD turnover ceiling is Rs 2 crore, rising to Rs 3 crore where cash receipts are 5 percent or less, so taking payment digitally both lifts the limit and lowers the deemed-profit rate. If you opt in and later opt out, the five-year lock-out under Section 44AD(4) applies.

A carpenter (a business) declares deemed profit of 6 or 8 percent under Section 44AD up to Rs 3 crore where cash is 5 percent or less; 44ADA does not apply to trades. (Income-tax Act 1961 s.44AD (Income-tax Act 2025 s.58))

GST on works-contract and on furniture

Register for GST at Rs 20 lakh of service turnover. There are two patterns to keep clean: site joinery and fit-out are works-contract services taxed at 18 percent with input credit; selling finished furniture is a supply of goods, generally taxed at 18 percent (wooden furniture). A composition option at 6 percent for small service providers (or 1 percent for goods traders) exists up to the relevant turnover limit, but you cannot then claim input credit on timber and fittings. Make sure your billing distinguishes a service job from a furniture sale.

GST registration at Rs 20 lakh; carpentry works-contract and wooden furniture are generally 18 percent with input credit, or composition without credit. (CGST Act 2017 ss.22-24 + s.10; SAC 9954 (works-contract), HSN 9403 (furniture))

194C TDS on subcontract work

When a builder, interior contractor or business pays you as a subcontractor, it deducts TDS under Section 194C at 1 percent (individual or HUF) or 2 percent (others), above Rs 30,000 for a single contract or Rs 1,00,000 aggregate in the year. Quote your PAN so the rate stays at 1 or 2 percent rather than the higher no-PAN rate, and reconcile the credit in Form 26AS and AIS against your return.

A business paying a carpenter-subcontractor deducts 1 or 2 percent TDS under Section 194C above the thresholds. (Income-tax Act 1961 s.194C (Income-tax Act 2025 s.393))

Allowable expenses

Category	Examples	Tax treatment
Tools and machines	Power saw, router, drill, planer, sander, hand tools	Deductible; subsumed in deemed profit under 44AD
Materials (cost of sale)	Timber, plywood, laminate, hardware, adhesives, polish	Cost of sale; GST input credit if registered (non-composition)
Workshop	Rent, electricity, dust extraction, storage	Deductible if keeping books; in deemed profit under 44AD
Work vehicle and fuel	Tempo or van for delivery, fuel, servicing	Deductible if keeping books; in deemed profit under 44AD
Insurance and safety	Liability cover, accident cover, PPE	Deductible; health premium separately under 80D
GST and admin	Accountant, GST filing, invoicing tools, phone	Deductible (apportion personal phone use)

Vehicle and travel costs

Under regular books a delivery vehicle attracts depreciation (plant-and-machinery block, Section 32) plus running costs. Under presumptive Section 44AD depreciation is treated as already allowed within the 6 or 8 percent deemed profit, and the written-down value still reduces for any future sale. Most small carpenters find 44AD simpler than tracking actual costs.

Capital allowances and equipment

On regular books, power tools, workshop machines and a delivery vehicle sit in the plant-and-machinery block and depreciate (generally 15 percent WDV). Under Section 44AD no separate depreciation is claimed, but keep invoices so the written-down value is correct on any later sale of a machine or vehicle.

Worked example

Anil — Jodhpur, RJ

sole-proprietor carpenter (site fit-out and made-to-order furniture) (2026-27)

Annual receipts Rs 26 lakh, mostly by bank or UPI (cash under 5 percent). About Rs 10 lakh is interior-contractor subcontract work on which 194C TDS at 1 percent was deducted. GST-registered.

Cash is under 5 percent, so he uses the Rs 3 crore 44AD limit and the lower 6 percent rate on digital receipts. Deemed profit: 6 percent of Rs 26 lakh = Rs 1,56,000. Under the new regime (basic exemption Rs 4 lakh) this is below the threshold, so income tax is nil; he still files and reclaims the Rs 10,000 of 194C TDS. He charges 18 percent GST with input credit on timber and fittings, keeps furniture sales and fit-out jobs billed separately, and pays any advance tax in a single 15 March instalment.

Common audit triggers for carpenters

Cash receipts over 5 percent of turnover while using the Rs 3 crore 44AD limit
Cash receipt of Rs 2 lakh or more from one party in a day (Section 269ST)
GST turnover not matching the 44AD turnover in the return
Furniture sales billed as services (or vice versa) to mismatch GST
Cash expense over Rs 10,000 to one party in a day (Section 40A(3))
194C TDS credit in 26AS or AIS not reconciled with income reported

Frequently asked questions

Should a carpenter use Section 44AD or 44ADA?+

Section 44AD. Carpentry is a business, not a notified profession, so you declare a deemed 8 percent of turnover (6 percent on digital receipts), not the 50 percent that 44ADA applies to specified professionals. Using 44ADA would overstate your taxable income and misapply the law.

Is selling furniture taxed differently from a fit-out job?+

They are different supplies for GST. A site fit-out is a works-contract service; selling finished furniture is a supply of goods. Both wooden furniture and works-contract are generally taxed at 18 percent with input credit, but you should bill them separately and keep the classification consistent so your GST returns reconcile.

When do I have to register for GST?+

Once your service turnover crosses Rs 20 lakh in a financial year (Rs 10 lakh in special-category states), or Rs 40 lakh if you mainly sell furniture as goods. Below that you can stay unregistered; above it, register and charge 18 percent with input credit, or consider the composition scheme if you want simplicity over credit.

How do I keep my tax simple as a one-person carpentry business?+

Use Section 44AD presumptive taxation: declare a deemed 6 or 8 percent of turnover, keep no detailed books within the limits, and pay advance tax once a year by 15 March. Take payment digitally to stay under the 5 percent cash condition, which unlocks the higher Rs 3 crore limit and the lower 6 percent rate.

Last reviewed: 29 May 2026