Consultant Agreement (Company Side)
A consultancy agreement drafted from the company side, structured so the engagement reads as genuinely independent rather than as employment.
A consultant agreement is the contract a company uses to engage an independent professional for defined work, covering scope, fees, IP ownership and confidentiality. It should reflect a genuinely independent relationship, not employment under another name.
What to watch when you use this
- Classification is assessed on the substance of the relationship, not the heading on the document.
- This template avoids the indicia that make a consultancy look like employment: fixed hours, exclusivity, and direction over method.
- If the engagement in practice involves daily direction and fixed hours, structure it as employment instead of drafting harder.
- IP is assigned expressly, since a contractor retains copyright by default.
Stamping and registration. Stamp duty is a State subject, and an unstamped or insufficiently stamped instrument is generally inadmissible in evidence under Section 35 of the Indian Stamp Act, 1899 until the duty and penalty are paid. Registration requirements are separate and depend on the instrument and the State. Confirm both for your State before executing this document.
CONSULTANCY AGREEMENT
This Agreement is made on [DATE] between [COMPANY NAME], [ADDRESS], CIN [CIN] ("Company") and [CONSULTANT NAME], [ADDRESS], [PAN] ("Consultant").
1. ENGAGEMENT
The Company engages the Consultant to provide the services described in Schedule 1 ("Services"). The Consultant is engaged as an independent contractor.
2. INDEPENDENCE
2.1 The Consultant determines the manner and method of performing the Services.
2.2 The Consultant is not required to work fixed hours or from the Company's premises, save where the nature of a specific deliverable reasonably requires it.
2.3 The Consultant may provide services to other clients, provided there is no conflict with clause 6.
2.4 The Consultant will use the Consultant's own equipment, save where the Company provides access to systems necessary for the Services.
2.5 Nothing in this Agreement creates a relationship of employment, partnership or agency, and the Consultant is not entitled to employee benefits.
3. TERM
This Agreement commences on [DATE] and continues until [DATE] or completion of the Services, unless terminated earlier under clause 8.
4. FEES
4.1 The Company will pay [AMOUNT] against the milestones in Schedule 2, on receipt of a valid invoice.
4.2 Fees are [inclusive / exclusive] of GST. The Consultant will issue a tax invoice compliant with applicable law.
4.3 Tax will be deducted at source as required under applicable law, and the Company will furnish the certificate within [NUMBER] days.
4.4 Invoices are payable within [NUMBER] days. Where the Consultant is registered as a micro or small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006, the payment timelines under that Act apply.
5. INTELLECTUAL PROPERTY
5.1 The Consultant assigns to the Company all copyright and other intellectual property rights in the deliverables created under this Agreement, for the full term of such rights, throughout the world.
5.2 The Consultant retains ownership of pre-existing materials listed in Schedule 3, and grants the Company a perpetual, worldwide, non-exclusive licence to use them as incorporated in the deliverables.
5.3 Nothing in this clause assigns any right that is not assignable under applicable law.
6. CONFIDENTIALITY
The Consultant will keep the Company's confidential information confidential, use it only for the Services, and not disclose it except as required by law. This obligation does not apply to information that is public, already known to the Consultant, independently developed, or lawfully received from a third party.
7. DATA PROTECTION
Where the Consultant processes personal data on behalf of the Company, the Consultant will process it only on the Company's documented instructions and for the purposes of the Services, apply reasonable security safeguards, notify the Company without undue delay on becoming aware of a personal data breach, and return or delete such data on termination.
8. TERMINATION
Either party may terminate on [NUMBER] days' written notice. The Company will pay for Services performed up to the date of termination.
9. LIABILITY
Neither party's aggregate liability exceeds the total fees payable under this Agreement, except for breach of confidentiality or infringement of third-party rights.
10. GOVERNING LAW AND DISPUTES
This Agreement is governed by the laws of India. The courts at [CITY] shall have jurisdiction.
Signed:
_______________________ _______________________
For [COMPANY] [CONSULTANT]
SCHEDULE 1: SERVICES
SCHEDULE 2: MILESTONES AND FEES
SCHEDULE 3: PRE-EXISTING MATERIALS
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This free template is provided by ClauseAudit as general information, not legal advice, and using it does not create an advocate-client relationship. Replace every [BRACKETED] placeholder. Stamp duty and registration requirements vary by State and are your responsibility. Have the final document reviewed by a qualified advocate before use.When to use this template
- When engaging an individual specialist, such as a developer, designer or adviser, for a defined project or period.
- When engaging a retired professional or an expert on a part-time basis without making them an employee.
- When the company needs IP in the deliverables assigned to it, since a contractor otherwise keeps copyright.
- When the consultant will handle personal data of the company's customers or staff.
How to fill it in
- Insert the company's name, address and CIN, and the consultant's name, address and PAN.
- Describe the Services in Schedule 1 by outcome and deliverable, not by hours or daily tasks. This supports the independent nature of the engagement.
- Set fees and milestones in Schedule 2, state the GST treatment, and fill in the payment and TDS certificate periods in clause 4. If the consultant is Udyam-registered as a micro or small enterprise, keep payment within the MSMED Act, 2006 limit of 45 days from acceptance.
- List the consultant's pre-existing materials in Schedule 3.
- Fill in the term in clause 3 and the notice period in clause 8.
- Compare the actual working arrangement with clause 2. If the consultant will work fixed hours under daily direction and exclusively for you, use an employment contract instead.
- Pay stamp duty as your State requires for an agreement and sign. Electronic signatures are generally valid for this agreement.
Key clauses explained
- Independence (clause 2)
- The consultant controls method, is not tied to fixed hours or premises, may take other clients and uses their own equipment. These facts, not the label, decide whether the relationship is employment.
- Fees, TDS and MSMED (clause 4)
- Links payment to milestones and valid invoices, provides for tax deduction and certificates, and applies MSMED Act, 2006 timelines where the consultant is a registered micro or small enterprise.
- Intellectual property (clause 5)
- Assigns copyright in deliverables to the company for the full term and worldwide, while pre-existing materials stay with the consultant under a licence. Without a written assignment the consultant would own the copyright.
- Confidentiality (clause 6)
- Limits use of the company's information to the Services, with the standard exclusions. It continues to protect information without restraining the consultant's future work.
- Data protection (clause 7)
- Gives basic processor terms: process only on instructions, keep data secure, report breaches promptly and return or delete data at the end. This supports the company's duties under the DPDP Act, 2023.
- Termination (clause 8)
- Either party may end the engagement on notice, with payment for services performed up to termination. A mutual right supports the independent character of the relationship.
Frequently asked questions
Does calling someone a consultant stop them being an employee?
No. Courts and authorities look at the substance of the relationship: who controls how the work is done, whether hours are fixed, whether the person is integrated into the business and whether they can work for others. A document headed "consultancy" will not override a working pattern that looks like employment, and misclassification can lead to claims for wages and statutory benefits.
Do the Labour Codes affect consultants?
The four Labour Codes, in force since 21 November 2025, define "employee" and "worker" by reference to the substance of the engagement. A genuinely independent consultant is generally outside those definitions, but a long-term consultant working like staff may not be. The Code on Social Security, 2020 also deals separately with gig and platform workers. State rules vary, so check how they apply to your arrangement.
Should TDS be deducted on consultant fees?
Usually yes. Fees for professional or technical services are subject to tax deduction at source once they cross the prescribed thresholds, and the company must issue a certificate. The Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026 and renumbered its provisions, so do not rely on old section numbers. Confirm the current provision and rate with a chartered accountant.
Why is an IP assignment needed when the company is paying?
Payment alone does not transfer copyright. Under Section 17 of the Copyright Act, 1957, the author is the first owner unless an exception applies, and the employment exception does not cover independent contractors. Clause 5 assigns the deliverables in writing, as Section 19 requires. An assignment of work not yet created takes effect when the work comes into existence, under Section 18.
Why does a consultancy need a data protection clause?
Under the Digital Personal Data Protection Act, 2023, the company remains responsible for personal data processed on its behalf, and Section 8 allows it to engage a Data Processor only under a valid contract. Clause 7 sets out basic processor terms. If the consultant will handle large volumes of personal data or sensitive categories, use a fuller data processing addendum as well.
Can the company add a non-compete?
A restriction stopping the consultant from working for others after the engagement ends is generally void under Section 27 of the Indian Contract Act, 1872, which voids agreements in restraint of trade, subject to narrow exceptions. Restrictions during the engagement and well-drafted confidentiality obligations are more defensible. Exclusivity also makes the relationship look more like employment, which works against the company.
Been handed the other side's version instead?
Upload it and get every clause checked against Indian law, with the provision each finding rests on.
Review a freelance & consultant contractRead before you sign
- Udyam Registered? Your Client Has 45 Days to Pay YouSections 15 and 16 of the MSMED Act set a payment deadline and compound interest on delay for registered micro and small suppliers.
- Should You Register on Udyam? What It Gets an Indian FreelancerUdyam registration is what brings a freelancer inside the MSMED payment protections. Here is what it does and does not give you.
- You Own Your Work Until You Sign It AwayUnder Indian copyright law an independent contractor is usually the first owner of what they create. Paying an invoice does not transfer it.
- Why Your IP Assignment May Expire After Five YearsSection 19 of the Copyright Act sets formalities for assignment, including a five-year default where no term is stated.
Related templates
This free template is general information about Indian law as at 2026-10-10, not legal advice, and using it does not create an advocate–client relationship. Replace every bracketed placeholder and have the final document reviewed by a qualified advocate before use.