Consultancy Agreement Format — Free Template for India

What a consultancy agreement is, and when you need one

A consultancy agreement is the contract you sign when you hire someone to do work for your startup without making them an employee. It covers freelancers, independent consultants, advisers who bill for their time, and agencies that build your app, run your marketing or do your design.

It does four jobs. It says what the work is. It says what you pay and when. It makes clear the person is not your employee. And it makes sure your company, not the consultant, owns what they make for you. The last point is the one founders miss most often, and it is the one investors check in due diligence.

You need one before the work starts, not after. If a freelancer builds your product on a WhatsApp message and an invoice, the ownership of that code is at best unclear. Under Section 17 of the Copyright Act, 1957, the author of a work is generally its first owner. The rule that an employer owns what an employee makes in the course of employment does not cover an outside contractor. So without a written assignment, the freelancer may still own the code you paid for.

The clauses that matter

Most of the agreement is standard. These are the parts worth reading slowly before you sign.

Scope of services and deliverables

Write down what they will do and what they will hand over. 'Build our website' leads to arguments. 'Design and build a five-page marketing website on our CMS, with two rounds of changes' does not. Most fee disputes are really scope disputes.

Fees, invoicing and payment days

Say the amount, the basis (fixed, retainer or time rate), when they invoice and how many days you have to pay. For a time rate, add a monthly cap so the bill cannot run away without your approval.

Tax at source and GST

Payments to consultants are generally subject to TDS, which you deduct and deposit as required by the Income-tax law. If the consultant is registered for GST, they add GST to their invoice. The agreement should say fees are exclusive of GST and that you deduct tax as required by law — check the current rules with your CA rather than hard-coding a rate.

Independent contractor

States the person is not an employee, gets no employee benefits and has no authority to bind your company. The clause helps, but the facts of the relationship matter more — see the section on misclassification below.

Intellectual property

An assignment of everything they make for you, plus a licence to any tools or code libraries they already owned and built into your deliverables. Without the licence, you own the finished product but may not have the right to use the parts inside it.

Confidentiality and non-solicitation

Confidentiality protects your information. Non-solicitation stops them poaching your staff or clients for a set period. Neither stops them working for other companies after the engagement ends — and in India, a clause that tried to would likely fail.

Termination and liability

A notice period lets either side walk away cleanly, with payment for work done. A liability cap limits what each side can claim, usually to the fees paid, with carve-outs for confidentiality and IP.

Consultancy agreement vs employment vs NDA

A consultancy agreement sits between an employment contract and an NDA. It is a full commercial contract for services, where an NDA only covers confidential information and an employment contract creates a relationship with obligations under labour and payroll law.

The misclassification risk

Calling someone a consultant does not make them one. If a tax officer, a court or a labour authority looks at the relationship, they look at what actually happens, not the label on the contract.

The warning signs are familiar. The consultant works fixed hours you set, sits in your office, reports to a manager like everyone else, has a company email and title, works only for you, and is paid a flat monthly amount that looks like a salary. If that describes your 'consultant', the relationship may be treated as employment — with consequences for tax deduction, statutory contributions and the person's rights when you let them go.

The fix is to make the paperwork match reality. If you want someone full-time, under your control and on your team, hire them as an employee. If they are genuinely independent — their own clients, their own tools, paid for outcomes or time they manage — a consultancy agreement fits. Keep each consultant's engagement tied to a defined piece of work, and review it when it quietly turns into a job.

Which version to use

The generator changes the wording depending on who you are hiring and how you pay them.

Individual freelancer, fixed fee

Best for a defined project — a logo, a website, a pitch deck. Tie payments to milestones so you never pay far ahead of the work.

Individual consultant, monthly retainer

For ongoing help, such as a fractional CFO or a growth adviser. Watch the misclassification signs — a long retainer with fixed hours can start to look like a job.

Agency or consulting firm

The firm signs through an authorised signatory and is responsible for its own staff. The agreement makes the firm pass on IP and confidentiality terms to everyone it puts on your work, and bans subcontracting without your consent.

Hourly or daily rate

Suits work that is hard to scope up front, like debugging or legal-style research. Always set a monthly cap and ask for timesheets with each invoice.

Why this agreement uses non-solicitation, not a non-compete

Section 27 of the Indian Contract Act, 1872 makes void any agreement that restrains someone from carrying on a lawful profession, trade or business, subject to narrow exceptions. Indian courts have generally refused to enforce restrictions that stop a person working in their field after a contract ends.

So a clause saying a freelancer cannot work for any other fintech for a year after your project is unlikely to hold. What stands on firmer ground is protecting your confidential information, and stopping the consultant from poaching the specific employees and customers they met through you — for a limited period. That is what this template does.

During the engagement itself, you can ask a consultant not to work for a direct competitor on the same kind of work, since that protects the engagement you are paying for. Add it as a custom clause if you need it, and get it reviewed.

What goes wrong

Starting work before signing

Anything made before the agreement is signed may not be covered by the IP assignment. Sign first, or make sure the assignment covers work done from the actual start date.

No licence to the consultant's own tools

Agencies reuse their own code and templates. If the agreement only assigns 'new' work, you may not be allowed to use the rest of what shipped.

Open-ended hourly billing

No cap and no timesheets is how a small job becomes a large invoice.

A full-time job on a consultancy contract

The label does not decide the relationship. If they work like an employee, they may be treated as one.

Forgetting stamp duty

Stamp duty on agreements is set by each state and varies — check your state's schedule. An unstamped agreement can be hard to rely on in a dispute.