Invoicing

What payment terms should an Indian freelancer put in a contract with a foreign client?

Author:: Editorial team, serviceexportguide.com
Verified by:: Editorial team
Published: 28 October 2026
Last modified: 30 October 2026
Reading time: 7 min read

Short answer

Export proceeds must reach India within nine months of each invoice date.¹² Rupee invoices get twelve months.² An advance and its later realisation go through the same AD bank unless both banks are told.¹ A GST invoice for a service is due within 30 days of supply.³ Under an LUT, unpaid invoices make IGST with interest payable after one year.⁶

Clause or rule	Applies to	Governed by	Deadline	Penalty	Last verified
Due date	Every export invoice	Regulation 5, 2026 Regulations¹²	Realised within nine months of invoice; twelve if in rupees²	Not covered on this page	28 October 2026
Advance or deposit	Exporters taking advances	Regulation 10¹	Not applicable	Not covered on this page	28 October 2026
Invoicing trigger	GST-registered freelancers	CGST Rules, rule 47³	30 days from the date of supply³	Not covered on this page	28 October 2026
Unpaid LUT invoice	GST-registered freelancers under an LUT	CGST Rules, rule 96A(1)(b)⁶	One year from invoice, or FEMA period if later, plus 15 days⁶	IGST with interest⁶	28 October 2026
Bank charges and short payment	Exporters paid short	Regulation 6¹	Not covered on this page	Not applicable	28 October 2026

A contract does not have to be long to protect you. For most freelancers, the payment section is what matters most: it decides when you get paid, in what currency, and what you can do if the client is late. This guide walks through the clauses that freelancers, consultants and small agencies commonly use with foreign clients, and the Indian rules each clause has to respect.¹³

It explains common structures; it is not legal advice. Contract law, enforceability and governing law depend on the countries involved. Have a lawyer review a template once, especially for large or long engagements.

What are payment terms in a freelance contract with a foreign client?

Payment terms in a freelance contract with a foreign client are the clauses that fix the fee and currency, when invoices are raised, when payment is due, who pays bank charges, and what happens if payment is late. These are commercial terms; none is prescribed by Indian law, but the Indian rules below set the limits they must fit.¹³

Clause	What it settles	Example wording idea
Fee and currency	Amount and currency	"$3,000, payable in US dollars"
Invoicing trigger	When you invoice	"On signing", "on delivery of each milestone", "monthly in arrears"
Due date	Days to pay after invoice	"Within 15 days of the invoice date"
Advance or deposit	Money up front	"40% on signing, balance on delivery"
Payment method	Wire, platform, card	"By bank transfer to the account on the invoice"
Bank charges	Who bears fees	"Each party bears its own bank's charges"
Late payment	Consequences of delay	"Work may be paused after 15 days overdue"
Kill fee or cancellation	Pay for partial work	"Work completed to the date of cancellation is billed"
Taxes	Who handles tax	"Fees are exclusive of taxes; each party handles its own tax"
Expenses	Reimbursable costs	"Pre-approved expenses billed at cost"

The amounts are illustrative, and the due dates shown sit well inside the nine-month realisation period.²

Who do the payment term rules apply to?

The payment term rules apply to every Indian freelancer exporting services, with GST invoice and LUT rules added for registered freelancers.¹³⁶

Freelancer type	Rules that apply	Why	Best for
Unregistered freelancer	FEMA realisation, advance and reduction rules	Regulations 5, 6 and 10 of the 2026 Regulations apply to exports¹	Freelancers below the GST limit
GST-registered freelancer under an LUT	FEMA rules plus rules 46, 47 and 96A	Invoice timing, endorsement and the LUT one-year rule apply³⁶	Registered writers, designers and developers
Small agency or LLP	Same as registered, plus W-8BEN-E for US clients	Entities give Form W-8BEN-E⁵	Agencies billing foreign clients

How do you set payment terms in a freelance contract with a foreign client?

You set payment terms by fixing the currency, invoicing trigger and due date, then adding advance, bank charge, late-payment and tax clauses that fit Indian rules.¹²³

Fix the fee and currency: use the currency you will invoice and be paid in. For GST, a supply counts as an export of services only if payment is received in convertible foreign exchange, or in Indian rupees wherever the Reserve Bank of India (RBI) permits (section 2(6)(iv) of the IGST Act).⁴ See pricing freelance services in USD and invoicing exports in INR.
Set the invoicing trigger and due date: a due date of 15, 30 or 45 days leaves plenty of margin inside the realisation period. A clause that lets the client pay "on completion of the client's own project" or "when the client is paid" has no fixed date, which makes it hard to stay inside nine months.²
Add an advance or deposit: regulation 10 of the 2026 Regulations covers advance receipts and requires the advance and the later realisation to be routed through the same AD bank, unless the change is intimated to both banks.¹ If the contract may require you to refund an advance when work is cancelled, say so clearly. See advance payment against exports and refunding an advance export payment.
Say who bears bank charges: common wording asks the client to pay its own bank's charges, or to send the payment with charges borne by the sender. See OUR, SHA and BEN charges.
Add a late-payment clause: a grace period, a right to pause work, and sometimes interest or a fixed late fee. Whether interest is enforceable depends on the governing law of the contract.
Add tax forms: say you will provide tax forms the client reasonably needs. A US client paying a non-US individual commonly asks for Form W-8BEN; an Indian company or LLP would give Form W-8BEN-E.⁵ See W-8BEN for Indian freelancers and foreign withholding tax.

If the client wants to pay through a parent company or a third party, write that into the contract and check the bank's view first. See third-party payments for exports.

What deadlines and documents apply to freelance contract payment terms?

Freelance contract payment terms work to the invoice date, which starts both the nine-month realisation clock and, for LUT exports, the one-year rule 96A clock.²⁶

Item	Rule	What it means for the contract	Best for
Invoice timing	Rule 47 of the CGST Rules³	An invoice for a taxable service is due within 30 days from the date of supply	Registered freelancers choosing a trigger
Invoice content	Rule 46 of the CGST Rules³	A registered freelancer puts the export endorsement on each invoice	Registered freelancers
Realisation	Regulation 5¹²	Due dates must leave room inside nine months (twelve for rupee invoices)	Every freelancer
Advance	Regulation 10¹	Advance and realisation through the same AD bank unless both banks are told	Freelancers taking deposits
Short payment	Regulation 6¹	AD bank can allow a reduction; a declaration may suffice up to ₹10 lakh	Freelancers paid short by bank fees

See export invoice format.

What happens if a foreign client does not pay on the contract terms?

If a foreign client does not pay an LUT invoice, rule 96A(1)(b) requires you to pay the integrated tax with interest within 15 days after one year from the invoice date, or the period allowed under FEMA including any RBI-permitted extension if that is later, unless the Commissioner allows a further period.⁶

Realisation extension: the authorised dealer (AD) bank can extend the realisation period on a reasoned request.¹
Short payment: if deductions leave the export value short, your AD bank can allow a reduction under regulation 6; for invoices up to ₹10 lakh or equivalent, your declaration may be enough.¹
Late-payment clause: works best when it is simple and you actually apply it.

This is a reason to invoice in step with the work and to chase overdue invoices early. If a client goes silent, follow the steps in what to do when a foreign client is not paying.

What is the timeline for payment under a freelance contract with a foreign client?

The timeline for payment under a freelance contract with a foreign client runs from the date of supply to the invoice, then to the due date, and must close within nine months of the invoice date, from 1 October 2026.¹²³

Step	Timing	Rule
Supply of the service	Set by the contract	Not applicable
Invoice	Within 30 days from the date of supply³	Rule 47³
Due date	Set by the contract, for example 15 to 45 days	Not applicable
Realisation	Nine months from the invoice date; twelve months if invoiced or settled in rupees²	Regulation 5¹²
LUT one-year rule	One year from the invoice date, or the FEMA period with any RBI extension if later⁶	Rule 96A(1)(b)⁶

Milestone contracts list each deliverable with its fee and due date; retainers set a monthly fee, a scope and a notice period. Each invoice under either structure has its own nine-month realisation deadline.² See milestone payments in export contracts and retainer and subscription billing.

What are the common mistakes with freelance contract payment terms?

The common mistakes with freelance contract payment terms are open-ended due dates, silence on bank charges, and invoicing long after the work is done.¹²³

Open-ended due date: "when the client is paid" has no fixed date.²
No bank charge clause: wires often arrive short because the sending or intermediary bank deducts a fee.¹
Late invoicing: rule 47 sets 30 days from the date of supply for a registered freelancer.³
Unclear refund terms: say whether an advance is refundable on cancellation.
No late-payment clause: without one, pausing work is harder to justify.

For example, say a UX designer agrees "$3,000, 40% on signing, balance within 15 days of the delivery invoice": both invoices fall well inside the nine-month realisation period.²

How did we verify this?

We checked this page against the sources below on 30 October 2026. Read our methodology or report an error.

Frequently asked questions

Does Indian law require a written contract for export of services?+

The FEMA and GST rules covered here do not require a signed contract for every export, but your AD bank may ask for supporting documents such as an agreement or invoice when it checks the genuineness of a transaction under regulation 4 of the 2026 Regulations.¹ A written contract also helps if you later ask for an extension.

Can a contract give the client more than nine months to pay?+

A foreign client can agree to anything commercially, but regulation 5 of the 2026 Regulations still requires realisation within nine months of the invoice date, or twelve months for rupee invoices, unless your AD bank extends it.¹² A contract due date beyond that period builds a compliance problem into the engagement from the start.

Who should pay international bank charges?+

Who pays international bank charges is a commercial term. Contracts often say charges are shared, or that the client pays its bank's charges and you pay yours. If deductions leave the export value short, your AD bank can allow a reduction in the export value under regulation 6 of the 2026 Regulations.¹

Should the contract mention GST?+

A freelance contract with a foreign client can state that the fee is exclusive of taxes. If your service qualifies as an export under section 2(6) of the IGST Act and you have filed a Letter of Undertaking, the invoice carries no IGST.⁴ Each party then handles its own taxes in its own country.

Does a US client need anything from me before paying?+

A US client commonly asks a non-US individual freelancer for Form W-8BEN before paying; an Indian company or LLP gives Form W-8BEN-E instead.⁵ The freelance contract can say you will provide the tax forms the client reasonably needs on request, so the first payment is not held up.

Can a foreign client pay through its parent company?+

A foreign client may want to pay through a parent company or a third party. Write that arrangement into the contract and check your bank's view first, because the bank checks the genuineness of each transaction under regulation 4 of the 2026 Regulations.¹ The third-party payments guide covers the RBI position.

Do milestone and retainer invoices each have their own deadline?+

Milestone and retainer invoices each have their own deadline. Each invoice under either structure carries its own nine-month realisation period from its invoice date, or twelve months for rupee invoices, under regulation 5.² Track every invoice separately, because an early milestone can fall due long before the project ends.

This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.

Keep reading