Templates / Consultancy Agreement

Consultancy Agreement

Consultancy agreement template for India. Scope, fees, IP ownership, and TDS clauses. eSign for ₹15.

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What is a Consultancy Agreement?

A consultancy agreement is a contract between a consultant and a client that defines the terms of a consulting engagement. It differs from a service agreement in that consulting typically involves advisory, strategic, or expert services rather than task-based execution. Governed by the Indian Contract Act, 1872, consultancy agreements must clearly establish the independent contractor relationship to avoid misclassification as employment.

Essential Clauses in a Consultancy Agreement

Scope of consultancy services
Duration and milestones
Fees and payment schedule
TDS deduction clause (Section 194J at 10%)
IP and work product ownership
Confidentiality and non-disclosure
Non-solicitation clause
Termination with notice period
Independent contractor declaration
Indemnification and liability limitation

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Stamp Duty & Registration

Consultancy agreements generally do not require stamp duty in most Indian states.

Can a Consultancy Agreement Be Signed with Aadhaar eSign?

Yes. Consultancy agreements are fully eligible for Aadhaar eSign under Section 3A of the IT Act, 2000.

Learn more in our Complete Guide to Aadhaar eSign →

Common Mistakes to Avoid

✗Not distinguishing consultancy from employment — this has major tax and labour law implications
✗Omitting TDS clauses — the client must deduct TDS at 10% under Section 194J
✗Not addressing intellectual property assignment for deliverables
✗Vague scope leading to scope creep and fee disputes

Frequently Asked Questions

What TDS rate applies to consultant fees?

10% under Section 194J of the Income Tax Act for professional/technical services. The client must deduct TDS and issue Form 16A.

How is a consultancy agreement different from employment?

A consultant works independently, sets their own schedule, can serve multiple clients, and is responsible for their own taxes. An employee works under employer direction, has fixed hours, and receives statutory benefits.

Can a consultant be held liable for advice given?

Yes. Consultants can be held liable for negligent advice. The agreement should include a limitation of liability clause and professional indemnity provisions.

Disclaimer

This template is for informational and reference purposes only and does not constitute legal advice. Laws and regulations change periodically. This template may need modification based on your specific circumstances and state laws. Consult a qualified legal professional before executing any legal document. SignSetu is not responsible for any consequences arising from the use of this template. Last updated: April 2026.

Governing Law: Indian Contract Act, 1872

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What is a Consultancy Agreement?

Essential Clauses in a Consultancy Agreement

Scope of consultancy services

Duration and milestones

Fees and payment schedule

TDS deduction clause (Section 194J at 10%)

IP and work product ownership

Confidentiality and non-disclosure

Non-solicitation clause

Termination with notice period

Independent contractor declaration

Indemnification and liability limitation

Common Mistakes to Avoid

✗Not distinguishing consultancy from employment — this has major tax and labour law implications

✗Omitting TDS clauses — the client must deduct TDS at 10% under Section 194J

✗Not addressing intellectual property assignment for deliverables

✗Vague scope leading to scope creep and fee disputes