Service Agreement / Master Services Agreement
Free master services agreement for India: statements of work, service levels, IP passing on payment, a liability cap and neutral arbitration.
A master services agreement sets the standing legal terms between a customer and a service provider, so each new project needs only a short statement of work. Use one for any repeat or ongoing business-to-business services relationship.
What to watch when you use this
- An MSA sets the general terms once; each project is then covered by a short statement of work. Make sure the order of precedence between the two is clear.
- If the service provider is a micro or small enterprise registered on Udyam, the MSMED Act, 2006 limits the agreed payment period to 45 days from acceptance and imposes interest on late payment, whatever the contract says.
- An assignment of copyright must be in writing and should identify the work, the rights, the duration and the territory. Under the Copyright Act, 1957, an assignment silent on duration is taken as five years and silent on territory as India only.
- Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Seventh Schedule, makes certain persons connected with a party ineligible to act as arbitrator. Avoid clauses letting one side alone appoint the arbitrator.
- If the provider will handle personal data for the customer, the Digital Personal Data Protection Act, 2023 treats the customer as Data Fiduciary and the provider as Data Processor. Attach a data processing addendum.
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.
MASTER SERVICES AGREEMENT
This Master Services Agreement ("Agreement") is made on [DATE] between:
[CUSTOMER NAME], [a company / LLP / firm], having its registered office at [ADDRESS], GSTIN [GSTIN] ("Customer"); and
[SERVICE PROVIDER NAME], [a company / LLP / firm / proprietorship], having its registered office at [ADDRESS], GSTIN [GSTIN], Udyam Registration No. [UDYAM NUMBER, IF ANY] ("Service Provider").
1. STRUCTURE
1.1 This Agreement sets out the general terms on which the Service Provider will provide services to the Customer. Specific services will be described in statements of work signed by both parties in the form of Schedule 1 ("SOW").
1.2 An SOW prevails over this Agreement only where it expressly says so, and only for that SOW.
2. SERVICES
2.1 The Service Provider will perform the services in each SOW with reasonable skill and care, in accordance with good industry practice and the service levels, if any, in the SOW.
2.2 The Customer will provide the information, access, approvals and other dependencies listed in the SOW in time. The Service Provider is not responsible for delay caused by the Customer's failure to do so, and timelines will be extended accordingly.
3. CHANGES
Either party may request a change to an SOW. No change is binding until both parties sign a written change order stating its effect on fees and timelines.
4. ACCEPTANCE
4.1 Where an SOW specifies deliverables, the Customer will test each deliverable against the acceptance criteria in the SOW within [NUMBER] business days of delivery and either accept it or give written reasons for rejection.
4.2 If the Customer does not respond within that period, or uses the deliverable in live operations, the deliverable is deemed accepted.
5. FEES AND PAYMENT
5.1 The Customer will pay the fees set out in each SOW. The Service Provider will raise GST-compliant invoices as provided in the SOW.
5.2 The Customer will pay undisputed amounts within [NUMBER] days of the invoice date. Where the Service Provider is a micro or small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006, payment will in any case be made within the period required by that Act.
5.3 If the Customer disputes any part of an invoice, it will notify the Service Provider in writing with reasons within [NUMBER] days of receipt and pay the undisputed part on time.
5.4 GST will be charged in addition to the fees. The Customer may deduct tax at source as required by law and will issue the relevant certificate in time.
6. PERSONNEL
The Service Provider is an independent contractor. Its personnel remain its employees or contractors, and it is solely responsible for their wages, social security contributions and compliance with applicable labour law.
7. INTELLECTUAL PROPERTY
7.1 Each party retains ownership of its intellectual property existing before, or developed independently of, this Agreement ("Background IP").
7.2 On receipt of full payment for a deliverable, the Service Provider assigns to the Customer all copyright and other intellectual property in that deliverable created specifically for the Customer, worldwide, for the full term of such rights, for use in any medium.
7.3 Where a deliverable includes the Service Provider's Background IP, the Service Provider grants the Customer a non-exclusive, perpetual, royalty-free licence to use that Background IP as part of the deliverable.
8. CONFIDENTIALITY
Each party will keep the other's confidential information secret, use it only for this Agreement, and disclose it only to personnel and advisers who need to know it. This does not apply to information that is public, already known, independently developed or received lawfully from a third party, or that must be disclosed by law. This clause survives for [NUMBER] years after termination.
9. DATA PROTECTION
If the Service Provider processes personal data on behalf of the Customer, the parties will sign a data processing addendum consistent with the Digital Personal Data Protection Act, 2023, and the Service Provider will process such data only on the Customer's documented instructions.
10. WARRANTIES
The Service Provider warrants that the services will be performed as described in the SOW and that deliverables, excluding Customer materials, will not knowingly infringe third-party intellectual property.
11. INDEMNITY
Each party will indemnify the other against third-party claims arising from its infringement of intellectual property, breach of confidentiality or data protection obligations, or wilful misconduct, provided the indemnified party notifies the claim promptly and allows reasonable control of the defence.
12. LIMITATION OF LIABILITY
12.1 Neither party is liable for indirect or consequential loss or loss of profit.
12.2 Each party's total liability under this Agreement is limited to the fees paid or payable under the relevant SOW in the twelve months before the claim.
12.3 These limits do not apply to fraud, wilful misconduct, the indemnities in clause 11, breach of confidentiality, or the Customer's obligation to pay fees.
13. TERM AND TERMINATION
13.1 This Agreement starts on the date above and continues until terminated.
13.2 Either party may terminate this Agreement or any SOW for convenience by [NUMBER] days' written notice.
13.3 Either party may terminate immediately by notice if the other commits a material breach not remedied within [NUMBER] days of written notice, or becomes insolvent.
13.4 On termination, the Customer will pay for services performed and expenses properly incurred up to the termination date, and the Service Provider will hand over work in progress paid for.
14. FORCE MAJEURE
Neither party is liable for delay caused by events beyond its reasonable control. If such an event lasts more than [NUMBER] days, either party may terminate the affected SOW.
15. DISPUTE RESOLUTION
15.1 The parties will first try to resolve any dispute through discussion between senior representatives within [NUMBER] days.
15.2 Unresolved disputes will be referred to arbitration by a sole arbitrator appointed by mutual agreement under the Arbitration and Conciliation Act, 1996, failing which the arbitrator will be appointed in accordance with that Act. The seat of arbitration will be [CITY] and the language English.
16. GENERAL
This Agreement, with its SOWs, is the entire agreement on its subject. Amendments must be in writing and signed by both parties. This Agreement is governed by the laws of India and may be signed electronically.
For [CUSTOMER NAME] For [SERVICE PROVIDER NAME]
_______________________ _______________________
Name: [NAME] Name: [NAME]
Designation: [DESIGNATION] Designation: [DESIGNATION]
Date: [DATE] Date: [DATE]
SCHEDULE 1: FORM OF STATEMENT OF WORK
SOW No. [NUMBER] under the Master Services Agreement dated [DATE]
1. Services and deliverables: [DESCRIBE]
2. Acceptance criteria: [DESCRIBE]
3. Timeline and milestones: [DATES]
4. Customer dependencies: [LIST]
5. Service levels, if any: [DESCRIBE, INCLUDING SERVICE CREDITS]
6. Fees and invoicing schedule: [AMOUNTS AND MILESTONES]
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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
- You provide IT, marketing, design, consulting or other services to a business client over several projects.
- You are a business engaging an agency or vendor and want one set of terms for all future work.
- Your current arrangement runs on purchase orders and emails with no agreed terms on IP, liability or payment.
- A client has sent its own MSA and you want a balanced version to compare it with.
How to fill it in
- Enter both parties' legal names, entity type, registered address and GSTIN, and the provider's Udyam number if it has one.
- Fill in payment days, dispute notice period, termination notice and the confidentiality survival period.
- Complete the first statement of work using Schedule 1, with clear deliverables, acceptance criteria and customer dependencies.
- If personal data will be processed, attach a data processing addendum before work starts.
- Pay stamp duty as applicable in the State of execution, usually by e-stamping. Rates for agreements vary by State.
- Sign through authorised signatories. Electronic signatures are generally valid for an agreement of this kind under the Information Technology Act, 2000.
- Keep a register of signed SOWs and change orders against the MSA.
Key clauses explained
- Acceptance with deemed acceptance (clause 4)
- Open-ended approval rights let a customer delay payment indefinitely. A fixed testing window with deemed acceptance gives both sides certainty.
- Payment and disputed invoices (clause 5)
- Requiring written reasons for disputes and payment of the undisputed part stops a small disagreement from freezing the whole invoice.
- IP passing on payment (clause 7)
- The customer gets full ownership of what it paid for, the provider keeps its reusable tools, and the assignment states rights, term and territory as the Copyright Act, 1957 contemplates.
- Mutual liability cap (clause 12)
- A cap tied to twelve months' fees keeps risk proportionate to the deal, while carve-outs for fraud, confidentiality and indemnities keep serious wrongs uncapped.
- Neutral arbitrator appointment (clause 15)
- Clauses letting one party alone choose the arbitrator are vulnerable under Section 12(5) of the Arbitration and Conciliation Act, 1996. Mutual appointment avoids that challenge.
Frequently asked questions
What is the difference between an MSA and an SOW?
The MSA contains the legal terms that apply to every project: payment, IP, confidentiality, liability, termination and disputes. A statement of work describes one project: what will be delivered, by when, at what price and how it will be accepted. Using both means you negotiate the legal terms once and only agree commercial details for each new piece of work.
Does the MSMED Act apply to service providers?
Yes. The Micro, Small and Medium Enterprises Development Act, 2006 covers suppliers of goods and services. If the provider is a micro or small enterprise registered on Udyam, the buyer must pay within the agreed period, which cannot exceed 45 days from acceptance or deemed acceptance. Late payment attracts compound interest at three times the bank rate notified by the Reserve Bank of India.
Who owns the work if the MSA says nothing about IP?
Under the Copyright Act, 1957, the author is generally the first owner of copyright, and the employment exception does not apply to an independent contractor. So without a written assignment, the service provider usually keeps copyright in what it creates, and the customer may only have an implied licence to use it. That is why clause 7 deals with ownership expressly.
Is a liability cap enforceable in India?
Courts generally respect liability caps agreed between commercial parties of comparable bargaining power, as an exercise of freedom of contract. Caps are less likely to protect a party against its own fraud or wilful misconduct, which is why this template excludes those. Keep the cap proportionate to the contract value and state clearly which obligations sit outside it.
Do I need to stamp a service agreement?
Stamp duty is payable on agreements in most States, often as a modest fixed amount, though some States charge differently for particular agreements. Check the schedule under your State's stamp law and pay by e-stamping before or at signing. An unstamped agreement can be impounded and may face admissibility problems until the duty and penalty are paid. Registration is not needed.
Should we choose arbitration or courts?
Arbitration offers privacy, a chosen decision-maker and often quicker resolution, but costs fees for the arbitrator and venue. Courts are cheaper upfront but can be slower. For contracts of significant value, arbitration with a mutually appointed sole arbitrator and a clear seat is common. For small contracts, the commercial courts or civil courts at an agreed city may be more practical.
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.