# Consultant & Independent Contractor Agreement

> A consultant or independent contractor agreement engages someone to deliver services without making them an employee. It defines scope and deliverables, fees and invoicing, TDS (10% on professional fees above ₹50,000 a year) and GST, IP ownership, confidentiality, and termination. If the relationship looks like employment in practice — fixed hours, supervision, integration into the team — labour law and tax authorities can treat it as employment regardless of the label.

Practice: Legal Documents & Agreements — https://www.industax.com/services/legal-documents/

Founders often engage early team members as consultants. That is lawful, but the agreement must match reality, and the IP the consultant creates must be assigned in writing — under the Copyright Act, an assignment that doesn't specify duration and territory is deemed to be for five years and for India only.

For freelancers, we draft agreements that protect payment: milestones, late-payment interest, kill fees and limits on liability.

## Key facts

| Item | Detail |
| --- | --- |
| TDS on professional fees | 10% above ₹50,000 a year |
| IP | Written assignment needed; specify duration and territory |
| Misclassification risk | Control, hours and integration indicate employment |
| GST | Consultant charges GST if registered |

## Who needs this

- Startups engaging consultants
- Companies hiring agencies
- Freelancers protecting their work and payments

## What's included

- Agreement drafting
- IP assignment clause
- TDS/GST notes
- Revision round

## Documents

- Scope of work
- Fee structure
- Party details

## Process

1. **Scope** — Work, fees and IP agreed.
2. **Draft** — Agreement prepared.
3. **Sign** — Executed and stamped.

## FAQs

### Who owns work created by a consultant?

By default the creator owns copyright in work made under a contract for services. You need a written assignment to own it — and it should state that it is worldwide and perpetual.

### Does the company need to deduct TDS on consultant fees?

Yes, 10% on professional or consultancy fees once payments to that person exceed ₹50,000 in the year (2% for certain technical services).

### Can a consultant become an employee later?

Yes; when they do, issue an appointment letter, enrol them in PF and ESIC where applicable, and end the consultancy agreement.

## Official sources

- India Code — central Acts: https://www.indiacode.nic.in/

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Canonical page: https://www.industax.com/services/legal-documents/consultant-agreement
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.