Consulting Agreement in India: Template and Key Clauses (2026)

A consulting agreement in India records the terms on which an independent consultant provides professional services to a client without becoming an employee. The drafting of fees and scope is the easy part. The parts that cause real trouble in India are the tax treatment, the risk of a consultant being treated as an employee, intellectual property ownership, and the fact that post-term non-compete clauses are usually void. This guide sets out the Indian law that applies, the key clauses, and a drafting skeleton. It is general information, not legal advice; take Indian advice before signing a live deal. ## What is a consulting agreement in India? It is a contract for services between a client and a consultant, who may be an individual or a firm or company. The consultant delivers defined services, is paid professional fees rather than a salary, works on their own account, and is not entitled to employee benefits such as provident fund, gratuity or statutory leave. The label alone does not settle the position. If the facts show an employment relationship, authorities can look behind the contract. ## What law governs consulting agreements in India? There is no single consulting statute. The agreement rests on the Indian Contract Act 1872 and is then shaped by tax, employment and IP rules: - Contract law. The Indian Contract Act 1872 governs formation, consideration and enforceability.

• Independent contractor versus employee. If the client controls how, when and where the work is done, provides all the tools, and expects exclusive personal service, the consultant can be treated as an employee. That can trigger provident fund (EPF), employees' state insurance (ESI) and gratuity obligations, and change the tax position. Genuine independence protects the consulting status.
• Tax deducted at source (TDS). Payments for professional or technical services attract TDS under section 194J of the Income-tax Act 1961. The client should deduct and deposit the correct amount.
• GST. A consultant above the registration threshold charges Goods and Services Tax on fees at the applicable rate. The agreement should state whether fees are inclusive or exclusive of GST.
• Intellectual property. Under the Copyright Act 1957, ownership of commissioned work does not automatically pass to the client in every case, so an express written assignment under section 19 is important. For employees the position differs, which is another reason to settle IP in the contract.
• Restraint of trade. Section 27 of the Indian Contract Act 1872 makes an agreement that restrains a person from exercising a lawful profession or trade void, subject to narrow exceptions. Post-termination non-compete clauses are therefore generally unenforceable in India. Confidentiality and non-solicitation drafted reasonably stand on firmer ground, and restrictions during the term are treated differently from those after it. ## Key clauses in an India consulting agreement - Services and deliverables: define scope precisely, with milestones where useful.
• Independent status: state that the consultant is not an employee and bears their own statutory obligations.
• Fees, TDS and GST: rates, invoicing, TDS under section 194J, and GST treatment.
• Intellectual property: a written assignment of IP in the deliverables under the Copyright Act 1957, with moral-rights acknowledgement.
• Confidentiality: protect the client's confidential information, including during and after the term.
• Non-solicitation: reasonable and limited, recognising section 27 limits on restraint.
• Term and termination: duration, notice and grounds.
• Liability and indemnity: a proportionate cap and clear indemnities.
• Stamp duty: note that the agreement will be stamped as required in the relevant state.
• Governing law and dispute resolution: Indian law, courts or arbitration. ## The employee-classification question The recurring risk in India is a consultant who looks like staff. If a person works full time, under close supervision, with no other clients and using the company's systems, labour and tax authorities may treat them as an employee, with back-dated EPF, ESI and other costs. A genuine consultant controls their own method, can take other work, is paid for output, and carries their own compliance. Build the arrangement that way, not just on paper. ## A simple drafting skeleton 1. Parties and date

2. Definitions
3. Services and deliverables
4. Independent contractor status
5. Consultant's obligations and standard of care
6. Fees, TDS (section 194J) and GST
7. Intellectual property assignment (Copyright Act 1957)
8. Confidentiality
9. Non-solicitation (section 27 limits on non-compete)
10. Term and termination
11. Liability and indemnity
12. Stamp duty
13. Governing law and dispute resolution
14. Signatures ## Common mistakes to avoid - Running a consultant like an employee and later facing EPF, ESI and gratuity exposure.

• Adding a post-term non-compete that is void under section 27 of the Indian Contract Act 1872.
• Leaving out the IP assignment, so ownership of commissioned work is unclear under the Copyright Act 1957.
• Missing TDS under section 194J or getting the GST treatment wrong. ## Keeping consulting contracts under control If you engage many consultants, the hard part is not one agreement. It is tracking which engagements have proper IP assignments, which risk employee reclassification, how TDS and GST are handled, and when each term ends. Drafting from a tuned template, flagging risky clauses per contract, and keeping versions straight is what an AI contract workspace can hold in one place. Adira is built for this, with per-clause risk review, plain-English clause editing and a live activity timeline. It is India-first, so Indian contract, tax and IP context is its home ground. More at Adira. The law above stands on its own. ## Bottom line A consulting agreement in India is built on the Indian Contract Act 1872, but it turns on four practical points: keep the consultant genuinely independent, settle IP in writing under the Copyright Act 1957, handle TDS and GST correctly, and remember that post-term non-competes are usually void under section 27. Get the status right in substance, and take Indian advice before signing a real deal.