Freelance Payment Terms: What to Put in Every Indian Invoice & Contract

Your contract's payment terms determine whether you get paid on time, paid late, or never paid. Here are the terms that actually work for Indian freelancers.

The golden rules

1. Never start work without a deposit
2. Always have written terms (contract + invoice)
3. Always have a late fee clause
4. Always get a signed acknowledgment
5. Always invoice in advance, not in arrears

1. Advance payment

Project size	Recommended advance
Under ₹20,000	100% upfront (or 50% if returning client)
₹20,000 – ₹1,00,000	50% on signing
₹1,00,000+	30-40% advance + milestones
Monthly retainer	100% in advance on 1st of month

If a client pushes back on the deposit, it is the single strongest predictor of non-payment. Walk away.

2. Milestone payments

For larger projects, split into 3-4 milestones:

Example (branding + website, ₹1.5 lakh):

• 30% (₹45,000) on signing and kickoff
• 30% (₹45,000) on approval of brand designs
• 30% (₹45,000) on staging website approval
• 10% (₹15,000) on launch and handover

Tie each payment to a concrete deliverable and approval — not to time. Don't start the next phase until the current milestone is paid.

3. Payment due date

• For advance payments: before work begins
• For milestone payments: within 3-7 days of milestone invoice
• For final invoice: before delivery of final files/credentials
• For retainers: 1st of each month, due within 7 days

Never use "payment due upon completion" — that means the client decides when completion is. Always specify a number of days.

4. Accepted payment methods

Make it easy to pay. Offer:

• UPI (primary — instant, free, universal)
• Bank transfer / NEFT / IMPS (for larger amounts)
• Razorpay/Paytm/Stripe payment link (for clients who prefer cards/wallets; 2% fee)
• Cheque (discourage; cheque bounce under Section 138 NI Act is a criminal offence but takes months)

Display your UPI ID, bank account (name, account number, IFSC), and Razorpay link clearly on every invoice.

5. Late payment fee

This is enforceable and effective:

"Invoices not paid within 15 days of the due date shall attract simple interest at 1.5% per month (18% per annum) on the outstanding amount from the due date until the date of actual payment."

18%/year is considered reasonable under Indian law. Higher rates may be struck down as penalty.

6. Work suspension for non-payment

"If any invoice remains unpaid for more than 15 days after the due date, the Service Provider may, without liability, suspend all work on the project until payment is received in full."

This is your strongest lever. Pause work. Politely. Every time.

7. TDS treatment

Clients paying for professional/technical services must deduct 10% TDS under Section 194J before paying you.

• This is NOT an extra cost; it is tax already paid on your behalf
• Client must deposit TDS to government and issue you Form 16A quarterly
• You can claim this TDS as credit against your final income tax liability when you file ITR
• Your invoice should show gross amount + GST (if applicable); client pays you net of TDS

You do NOT deduct TDS from your own invoices. The client does. Issue the invoice for full amount; client pays you 90% and remits 10% to government.

8. GST treatment

If you are GST-registered:

• Charge CGST+SGST for intra-state clients
• Charge IGST for inter-state clients
• 0% GST for exports under LUT
• GST is added on top of your fee, not deducted

If you are not GST-registered, you do not collect GST. Clients can still deduct TDS.

9. Non-refundable deposits

Make it explicit that the advance is non-refundable once work has commenced:

"The deposit secures the project slot and covers initial work performed. It is non-refundable once work commences, but will be credited against the final invoice."

This prevents clients booking you and ghosting while you turned down other work.

10. Kill fee / cancellation

If client cancels mid-project:

• All work completed up to that date is billable
• 25-50% of remaining fee due as cancellation fee for reserved time
• Final files delivered only upon payment

Sample payment clause (copy/paste into contracts)

"Fees: 50% of the total fee (₹XX,XXX) is due upon signing this agreement as a non-refundable deposit to secure the project slot. The remaining 50% (₹XX,XXX) is due upon delivery of final work for review, prior to handover of final files/credentials. Payments shall be made via UPI or bank transfer to the account specified on the invoice. Invoices are due within 7 days of issue. Late payments attract simple interest at 1.5% per month. Work may be suspended on any overdue invoice beyond 15 days."

Use our free invoice generator to generate GST-compliant invoices with these terms pre-included, and the contract generator for full agreements.