Commercial Contracts

Consultancy / Advisory Agreement

The label on the document does not decide the relationship. A consultant who works fixed hours under direction, using the company’s equipment, integrated into its teams, may be an employee in substance — with statutory consequences that follow automatically, whatever the agreement says.

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Consultancy Agreement

Engagement of an independent consultant — not a contract of employment

This Consultancy Agreement (this "Agreement") is made at [PLACE OF EXECUTION] on [DATE] (the "Effective Date").

BY AND BETWEEN

[COMPANY NAME], a company incorporated under the Companies Act, 2013 bearing CIN [CIN], having its registered office at [REGISTERED OFFICE ADDRESS] (the "Company") of the ONE PART;

AND

[CONSULTANT NAME], [CONSTITUTION — an individual holding PAN ______ / a firm / a company bearing CIN ______], residing at or having its principal place of business at [ADDRESS] (the "Consultant") of the OTHER PART.

Recitals

A.The Company requires specialist professional services in the field of [FIELD OF EXPERTISE].

B.The Consultant carries on an independent business or profession and represents that it possesses the qualifications, experience, licences and resources required to provide such services.

C.The Company wishes to engage the Consultant as an independent contractor, and not as an employee, on the terms set out below.

NOW THEREFORE the Parties agree as follows:

1. Engagement and scope

1.1The Company engages the Consultant, and the Consultant accepts the engagement, to provide the services described in Schedule 1 (the "Services") on the terms of this Agreement.

1.2The Consultant shall perform the Services with the standard of skill, care and diligence reasonably expected of a competent professional in the Consultant’s field, and in accordance with applicable law, professional standards and the Company’s reasonable instructions as to the outcomes required.

1.3The Consultant shall devote such time and attention to the Services as is necessary for their proper performance, and shall meet the timelines and deliverable dates set out in Schedule 1.

1.4The Consultant shall report to [NAME AND DESIGNATION OF COMPANY CONTACT] and shall provide written progress reports [FREQUENCY — e.g. fortnightly].

1.5The Consultant shall not hold itself out as an employee, officer or agent of the Company, and shall not enter into any commitment on behalf of the Company or bind it in any manner, without the Company’s prior written authority.

2. Status of the consultant

2.1The Consultant is an independent contractor. Nothing in this Agreement creates a relationship of employer and employee, master and servant, partnership, joint venture or agency between the Parties.

2.2The Consultant acknowledges and agrees that:

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8 more pages in the Word file

Preview of the first page. Highlighted fields are the ones you fill in — they appear the same way in Word. Scroll the preview to read on; the full document runs to 9 pages.

Notes for use

These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.

The status question is the real risk

The single largest exposure in a consultancy arrangement is a later finding that the consultant was in substance an employee — which brings provident fund, gratuity, ESI, notice pay and potentially retrenchment liability with it. Courts and authorities look at substance, not the label: control over how the work is done, integration into the organisation, exclusivity, fixed hours, use of company equipment, and whether the person bears any commercial risk. Clause 2 is drafted to support independent status, but the arrangement must actually operate that way. If you set the consultant’s hours, give them a company email and a reporting line into a team, and engage them exclusively for years, the document will not save you.

Labour Codes context

The four Labour Codes came into force on 21 November 2025, with Central Rules finalised on 8 May 2026. They tighten the statutory definitions of "employee", "worker" and "wages", and the Code on Social Security, 2020 brings gig and platform workers within specified benefit schemes. State rules differ and several States are still notifying theirs — verify your State’s position before treating any long-running engagement as outside the statutory net.

Use a consultancy agreement only where it fits

If the person will work fixed hours under supervision as part of a team, engage them as a fixed-term employee instead. Under the Labour Codes a fixed-term employee is entitled to pro-rata gratuity and to parity of conditions with permanent staff, which is often cheaper and far less risky than defending a misclassification claim.

Moral rights waiver

Clause 6.3 waives moral rights so far as the law permits. Section 57 of the Copyright Act, 1957 gives the author the right to claim authorship and to restrain distortion; the right to claim authorship in particular is not comfortably waivable in India. Where attribution matters commercially, negotiate an express credit line instead of relying on the waiver.

Assignment of future work

Clause 6.2 assigns future rights. An assignment of copyright in a future work takes effect only when the work comes into existence, so keep the further-assurance obligation in Clause 6.4 and, for anything valuable, take a short confirmatory deed of assignment on completion.

TDS rate

From 1 April 2026, deduction is under Section 393 of the Income-tax Act, 2025. Professional fees and technical services sit in different table entries and attract different rates; the challan and quarterly return must quote the new payment codes, not the old 194-series numbers. Confirm the correct code with your chartered accountant before the first payment.

GST and reverse charge

If the consultant is unregistered, check whether the supply attracts reverse charge in your hands. Also confirm whether the consultant is required to register at all, based on turnover and the nature of supply.

Stamp duty

Nominal in most States as an agreement, but ad valorem in some where consideration is stated. Duty is payable in the State of execution.

Current as of

Reflects Indian law current as of {{DATE OF USE}}. Verify your State’s position on the Labour Code rules before relying on this document.

This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.