{"id":828,"date":"2026-08-06T14:50:05","date_gmt":"2026-08-06T09:20:05","guid":{"rendered":"https:\/\/www.taxaj.com/learn\/consultancy-agreement\/"},"modified":"2026-08-14T11:09:54","modified_gmt":"2026-08-14T05:39:54","slug":"consultancy-agreement","status":"publish","type":"post","link":"https:\/\/www.taxaj.com/learn\/consultancy-agreement\/","title":{"rendered":"Consultancy Agreement \u2014 Key Clauses & What to Include"},"content":{"rendered":"

A consultancy agreement<\/strong> is the contract between a business and an independent consultant that defines the scope of work, fees, confidentiality and ownership of work product. Getting it right avoids disputes and clarifies that the consultant is an independent contractor, not an employee. This guide covers the key clauses.<\/p>\n

What is a consultancy agreement?<\/h2>\n

It is a services contract<\/strong> under which a consultant provides specified professional services to a client for a fee, as an independent contractor<\/strong>. Unlike an employee, the consultant controls how the work is done and is responsible for their own taxes and (where applicable) GST.<\/p>\n

Key clauses to include<\/h2>\n
    \n
  • Scope of work \/ deliverables<\/strong> \u2014 precise description of services and outputs.<\/li>\n
  • Fees & payment terms<\/strong> \u2014 amount, schedule, expenses, and GST treatment.<\/li>\n
  • Term & termination<\/strong> \u2014 duration, notice period, and grounds for termination.<\/li>\n
  • Confidentiality<\/strong> \u2014 protection of the client’s confidential information.<\/li>\n
  • Intellectual property<\/strong> \u2014 assignment\/licensing of work product to the client.<\/li>\n
  • Independent contractor status<\/strong> \u2014 clarifying there is no employer-employee relationship.<\/li>\n
  • Indemnity, liability & limitation<\/strong> of liability.<\/li>\n
  • Non-solicitation \/ non-compete<\/strong> (where reasonable), governing law and dispute resolution.<\/li>\n<\/ul>\n

    Tax & GST note<\/h2>\n

    A consultant providing services must charge GST<\/strong> once over the threshold, and the client typically deducts TDS<\/strong> on professional fees (Section 194J). Make the GST and TDS treatment explicit in the fees clause to avoid confusion.<\/p>\n

    Consultant vs employee<\/h2>\n

    Be careful not to draft an “employment in disguise.” If the person works under the client’s control, fixed hours and integration like an employee, authorities may treat them as an employee (with PF\/ESI and employment-law consequences). The agreement and the actual working arrangement should both reflect genuine independence.<\/p>\n

    Frequently asked questions<\/h2>\n

    Is a consultant an employee?<\/h3>\n

    No \u2014 a consultant is an independent contractor<\/strong> engaged under a services agreement, responsible for their own taxes and GST, and not entitled to employee benefits.<\/p>\n

    Who owns the work a consultant produces?<\/h3>\n

    It depends on the IP clause<\/strong> \u2014 typically the agreement assigns the work product to the client; without such a clause, ownership can be disputed.<\/p>\n

    Is TDS deducted on consultancy fees?<\/h3>\n

    Yes, usually under Section 194J<\/strong> (professional\/technical services), and the consultant charges GST if registered.<\/p>\n

    \n

    Need a solid consultancy agreement?<\/strong> TAXAJ drafts consultancy and services contracts tailored to your work. Get your agreement drafted by TAXAJ \u2192<\/strong><\/a><\/p>\n

    Related guides:<\/em> Legal services<\/a> \u00b7 Legal templates<\/a> \u00b7 Part-time employment contracts<\/a><\/p>\n