Invoice and Contract Secrets for Indian Freelancers with Foreign Clients

Key takeaways

Why Indian freelancers need a specialized service agreement

Foreign clients operate with different payment systems, compliance expectations, and tax rules, so a standard domestic template often fails. A specialized agreement reduces delays, clarifies acceptance, locks in fair FX handling, and documents export of services for GST and income tax audits.

The core problems you are solving

• Unpredictable payment delays caused by SWIFT hops and internal approvals.
• Currency markups that silently reduce your earnings.
• GST confusion on whether to charge tax, how to prove export, and what to file.
• Chargebacks on accepted work, long after delivery.
• Insufficient documentation for proving export of services during audits.

Clarity beats hope. Put acceptance criteria, payment due dates, and FX rules in writing, before work starts.

Complete service agreement template highlights

Parties, scope, and deliverables

Define the parties, project summary, and deliverables with measurable outputs. Acceptance occurs on written confirmation within a set review window, silence is not acceptance unless clearly agreed, revisions are limited and priced beyond scope.

• List every output precisely, for example, “3 high fidelity Figma wireframes, 15 user flows (PDF), accessibility audit with WCAG 2.1 checklist.”
• Acceptance window: 5 business days to review, then payment triggers.
• Revision allowance: 2 rounds per deliverable, extras billed at a stated rate.

Timeline and milestones

Set start and end dates, add milestones with payment triggers on acceptance, extend timelines proportionally when client materials or approvals arrive late, payment obligations remain unchanged.

Example: Client delivers brand guidelines 9 days late, you extend the milestone due date by 9 days, payment timing remains tied to acceptance.

Payment terms that protect cash flow

• Advance: 30 to 50% upon signature.
• Due date: 5 to 7 business days post acceptance, interest at 2% per month on overdue amounts.
• Suspension: If 15+ days overdue, pause work and deadlines until paid.
• Fees: Client bears all bank and intermediary charges, you must receive the quoted net amount.
• Chargebacks: If client disputes after 30 days of acceptance, they indemnify chargeback fees and your lost income.

Tax clause and export of services

When you deliver services to a foreign client and get paid in convertible foreign exchange, the supply can be zero rated under IGST. Keep your documentation tight: contract, invoices, proof of delivery, and e-FIRA for each payment. Maintain a Letter of Undertaking (LUT) if you are GST registered.

• If any zero rating condition fails, charge GST at applicable rates.
• Withholding tax: Use gross up or DTAA treaty relief via TRC and Form 10F to avoid payout cuts.

Plain English: Zero rated means you don’t charge GST when all export conditions are met, but you must keep audit ready evidence, especially e-FIRA.

Invoicing and compliance

Issue milestone invoices with your legal name, PAN and GST where applicable, detailed service descriptions, foreign currency amounts, payment method, due date, and reference to the agreement. Keep records for 6 years under Indian income tax rules.

Currency and foreign exchange

• Quote in USD, GBP, or EUR at mid market rates, not retail markups.
• Allow short currency holding, for example, up to 30 days, then convert when rates are favorable.
• Offer optional rate locks with a small buffer if the client insists.

Timing matters. Converting $10,000 at 84.50 vs 83.00 can add ₹15,000 to your payout—without extra work.

IP ownership and confidentiality

• Client owns the final work product upon full payment.
• You retain pre existing IP and tools, grant a limited license for their use within the deliverables.
• Both parties protect confidential information, follow GDPR and India’s DPDP where personal data is involved.

Client responsibilities and change requests

• Client provides timely approvals, materials, and access, delays extend timelines without affecting fees.
• Out of scope work requires a written change order, revised timeline, and additional fees.

Warranty, standards, and limitation of liability

• Professional services warranty, remediation inside the agreed revision window.
• Liability capped at fees paid for the specific deliverable, no consequential damages.

Subcontracting

No subcontracting without the client’s written consent, you remain responsible for quality and confidentiality.

Termination

• Client may terminate with notice, pays for work completed and partial milestones, you deliver WIP after final payment.
• You may terminate for non payment or material breach after notice and cure period.

Dispute resolution and governing law

• Prefer binding arbitration with a neutral seat, for example, Singapore or London, proceedings in English.
• Specify governing law clearly, for example, India, to avoid procedural surprises.

Force majeure, notices, entire agreement, signatures

Include standard protections for uncontrollable events, formal notice methods, and signature lines for both parties. Appendices list detailed scope and payment schedule.

Common mistakes Indian freelancers make with service agreements

Vague payment terms

Replace “net 30” with “due within 5 business days post acceptance,” add interest and suspension rights.

No currency or FX clause

Mid market FX must be explicit, client bears fees, otherwise you lose money silently.

Missing export of services language

Without zero rating language, LUT, and e-FIRA evidence, audits get painful.

No acceptance criteria

Define measurable checks, set review windows, and lock payment triggers.

No chargeback protection

Accepted deliverables should be non refundable after 30 days, with client indemnity for disputes.

Undefined revision allowance

Two rounds is standard, extra rounds are billed, write it down.

Broad scope of work

Be specific on pages, features, performance, and accessibility thresholds.

No termination or suspension clause

Include rights to pause work when invoices go overdue.

Governing law left blank

Set India’s law plus neutral arbitration, or negotiate indemnities if you accept the client’s courts.

No withholding tax clause

Ask upfront, use gross up or treaty relief, otherwise payouts get cut by 15 to 30%.

Checklist before sending your service agreement

• Client legal entity and address verified.
• Payment method agreed, client bears bank and intermediary fees.
• Quoted in USD, GBP, or EUR, mid market FX basis stated.
• Advance 30 to 50% upon signature, documented.
• Milestones tied to acceptance, with 5 day review window.
• Revision allowance: 2 rounds per deliverable, extras billed.
• Export of services clause with LUT and e-FIRA coverage.
• Invoice template ready with PAN, GST (if applicable), foreign currency amount.
• Late payment interest and suspension rights included.
• Chargeback protection and client indemnity after acceptance.
• Dispute resolution, governing law, and arbitration seat set.
• IP transfer upon full payment, pre existing IP retained.
• Confidentiality and data protection, GDPR and DPDP compliance noted.
• Signatures and dates collected from both parties.

Real world scenarios for Indian freelancers

Scenario 1: US client, ACH payment, 30% withholding tax

Ask about WHT early, propose gross up so you receive the full fee, or provide TRC and Form 10F to reduce WHT under DTAA. Quote in USD, set mid market FX, and ensure the client bears ACH or intermediary fees. Use milestone acceptance and a 40% advance to protect cash flow.

Numbers: $15,000 fee, 30% WHT → gross fee $21,428.57 so your net is still $15,000. With treaty relief to 15%, gross fee drops to $17,647.06, same net to you.

Scenario 2: EU client, SEPA transfer, lawyer wants local courts

Offer ICC arbitration with a neutral seat like London, otherwise negotiate indemnities and liability caps if you accept their courts. Use EUR quotes, SEPA for speed and low cost, and keep export of services zero rating language intact.

Scenario 3: Chargeback risk after 60 days

Protect yourself with written acceptance, a 30 day no refund window, and chargeback indemnity. Deliver via traceable links, store acceptance emails, and file strong evidence if disputes arise.

Scenario 4: Export of services proof for tax audit

Organize contracts, invoices, e-FIRA, delivery proofs, LUT copy, and bank statements in one place, keep records for 6 years.

Tools and platforms for managing international payments

Karbon Business provides multi currency business checking in USD, GBP, EUR, and CAD, local transfers, automatic e-FIRA within 24 hours, INR settlement within 24 to 48 hours, and flat 1% fees with zero FX markup on mid market Xe.com rates. You can hold currency up to 60 days, which pairs well with your FX timing clause.

Wise Business, Payoneer, PayPal, and RazorpayX International are also popular choices, each with different fees and compliance features. Whichever you pick, download e-FIRA or equivalent receipt for every inbound payment.

Practical negotiation tips for Indian freelancers

• Advance, always: Ask for 30 to 50% upfront. If pushed, offer 20% upfront, 40% mid point, 40% on final acceptance.
• Bank charges on client: State explicitly that you must receive the full quoted amount, client bears all fees.
• Acceptance window: 5 business days to review, then payment is due within 5 to 7 business days.
• Scope creep guard: Use written change orders with new timelines and fees.
• Suspension leverage: If 15+ days overdue, pause work and deadlines.
• Export language: Zero rated IGST, LUT on file, e-FIRA retained for compliance.

Legal disclaimer

This guide is general information, not legal or tax advice. Consult a Chartered Accountant for GST zero rating, withholding tax, and foreign income filings, and a lawyer for contract review, dispute resolution choices, and enforcement strategy.

FAQ

How do I write a service agreement for a foreign client so payment actually comes on time?

Use milestone based acceptance, payment due within 5 to 7 business days of acceptance, late payment interest at 2% per month, and suspension rights after 15 days overdue. Add client responsibility for bank charges. Many freelancers also use Karbon Business for faster local USD, GBP, EUR receipts and quick INR settlement, which reduces delays further.

Do I need GST registration to work with foreign clients, or can I claim export of services without GST?

If you are below the registration threshold, you won’t charge GST, but still maintain export evidence, invoices, and payment receipts. If you are GST registered, claim zero rated export, maintain a LUT, and keep e-FIRA with each inward remittance. The key is proving payment in convertible foreign currency and the client being outside India.

LUT under GST kya hota hai, kaise apply karu, kitna time lagta hai?

A LUT is your declaration that you will supply export services without paying GST, subject to rules. Apply via your GST portal or through a CA, typical turnaround is a few days. Once in place, you invoice without GST for qualifying exports, and store the LUT with your contract and e-FIRA.

e-FIRA kaise milta hai Wise, bank transfer, ya Karbon Business ke through?

Most platforms and banks generate e-FIRA automatically upon credit of foreign currency. In Wise or your bank, download from the dashboard or request via support. With Karbon Business, e-FIRA is available within 24 hours of receipt, which makes GST and income tax audits smoother.

US client net 60 bol raha hai, advance kaise negotiate karu?

Counter with 50% advance upon signature and the remainder within 5 to 7 business days of final acceptance. Offer flexibility, for example, 40% upfront, 30% mid milestone, 30% on completion. Emphasize your costs and delivery schedule. Pair this with quick payout options like Karbon Business so funds arrive fast when approved.

WHT 30% lag raha hai US se, TRC aur Form 10F se kaise kam kar sakta hu?

Ask the client about WHT early. Provide India’s Tax Residency Certificate and Form 10F to claim DTAA relief, often reducing US WHT to 15% or less. Best approach is a gross up clause so you still receive your full fee, the client absorbs WHT, or they apply treaty reduced rates after your TRC.

SWIFT mein charges cut ho jaate hain, best platform konsa hoga receive karne ke liye?

SWIFT can incur $20 to $100 in intermediary fees. Consider local rails where possible, for example, ACH for US, SEPA for EU, FPS for UK. Platforms that provide local accounts in major currencies help. Karbon Business offers local USD, GBP, EUR accounts and quick INR settlement, with e-FIRA automation and transparent mid market FX, which reduces hidden deductions.

Kya main USD hold kar sakta hu 30 din ke liye aur baad mein INR convert karu, RBI allowed hai?

Yes, holding foreign currency in a multi currency account for a short period is standard, especially via compliant platforms. Your agreement should state a holding window, for example, up to 30 days, then convert at mid market rates. Many freelancers use Karbon Business or similar solutions to manage timing and get better INR outcomes.

Client ne 60 days baad chargeback file kar diya, accepted work ke baad main kya karu?

Present your signed contract, acceptance emails, delivery logs, and invoice. If your agreement says accepted deliverables are non refundable after 30 days and the client indemnifies chargeback fees, you have leverage. File a dispute with the payment platform, and consider arbitration if needed per your dispute clause.

Foreign client ke liye invoice format kaisa hona chahiye?

Include your legal name and address, PAN and GST if registered, client’s legal details, detailed service description, foreign currency amount, payment method and bank details, due date, and reference to the agreement. Note zero rated export language and keep the e-FIRA for that payment.

Arbitration better hai ya Indian courts, agar client foreign hai?

For cross border disputes, neutral seat arbitration, for example, Singapore or London, is often faster and more enforceable under the New York Convention. Courts can be slower and give home advantage to one side. In your agreement, specify governing law and arbitration rules, language, and seat to avoid uncertainty.

Karbon Business use karne se mujhe kya benefit milega as a freelancer receiving international payments?

Karbon Business provides local currency accounts in USD, GBP, EUR, and CAD, fast INR settlement, automatic e-FIRA within 24 hours, a flat 1% platform fee with zero FX markup at mid market rates, and the ability to hold currency up to 60 days. This aligns well with the payment, FX timing, and compliance strategies in your agreement.