Which Payment Clauses Should a Freelance Contract with an International Client Include?

Payment terms in a freelance contract with an international client are the clauses that fix how much you are paid, in which currency, when, and by whom. Indian law does not prescribe a template for these clauses. They still matter because FEMA and GST rules on exports of services are measured against your invoices and the payments you receive.

• Amount: The fee, the pricing basis (fixed, hourly, retainer or milestone) and whether taxes or bank charges are included.
• Currency: The currency of the invoice and of payment. FEMA Manner of Receipt and Payment Regulations, 2023, regulation 3(2)(I) allow receipts from countries outside the Asian Clearing Union in rupees or any foreign currency.
• Timing: When you invoice and how many days the client has to pay. Regulation 5(1) of the FEMA export regulations, 2026 counts the 9-month realisation period from the invoice date for services.
• Payer: Who sends the money. Payment from someone other than the client is a third party receipt, which regulation 8 lets your AD bank permit only if it is satisfied with the bona fides of the transaction.
• Exit: What happens to advances, unpaid work and refunds if the project is cancelled or reduced.

The rest of this guide maps each clause to the rule it supports. For the invoice layout itself, see the freelancer invoice template for international clients.

Every Indian resident who exports services to a foreign client needs payment terms that fit FEMA, because the FEMA export regulations, 2026 treat services, including software, as exports. GST-specific clauses matter only to freelancers registered under GST who export under a Letter of Undertaking or pay IGST.

Write payment terms by starting from the export rules and working back to the dates in the contract. Set due dates well inside 9 months from each invoice, name the paying entity, fix the currency and decide in advance how advances, cancellations and bank charges are handled.

1. Record the client's full legal name, address and country, since the recipient being located outside India is a condition of export of services under IGST Act section 2(6).
2. Describe the services precisely, so your bank can report the correct purpose code and you can show the place of supply is outside India.
3. State the fee, the pricing basis and the invoicing currency.
4. Set an invoice schedule (monthly, per milestone or on delivery) and the number of days the client has to pay after each invoice.
5. If you take an advance, state the amount, what it covers and what happens to any unused part.
6. Name the entity that will pay and the account you will be paid into; avoid open-ended wording such as "or its affiliates" unless you have discussed third party payment with your AD bank.
7. Decide who bears bank and intermediary charges, and state that the fee is payable without deduction except taxes required by law.
8. Add a late payment clause and a process for disputed invoices, so that unpaid amounts are chased long before the realisation deadline.
9. Add cancellation and partial delivery terms covering how much is payable for work done and how refunds of advances are made.
10. Keep the signed contract with your invoices and bank advices, because your AD bank may ask for it when it checks the genuineness of a receipt.

A freelance contract should include at least ten payment clauses covering parties, scope, fee, currency, invoicing, due dates, advances, payer, charges and cancellation. Each one supports a specific FEMA or GST requirement, so a missing clause usually shows up later as a bank query or an open EDPMS entry.

If payment terms let a client pay late, pay from an unknown party or pay less, you can end up with unrealised export proceeds, an open EDPMS entry and GST payable on an export invoice. FEMA contraventions can attract a penalty of up to three times the sum involved under FEMA section 13(1).

• Open entries: Your AD bank must monitor realisation and follow up under regulation 5(2), so unpaid invoices lead to bank queries.
• Future exports: Proceeds unrealised for more than one year beyond the due date mean further exports only against full advance or an irrevocable letter of credit under regulation 13.
• GST under LUT: Under Rule 96A(1)(b), tax with interest becomes payable if payment is not received within one year, or the FEMA period with extensions if later, from the invoice date.
• Export status: A payment that is not in convertible foreign exchange or RBI-permitted rupees fails the condition in IGST Act section 2(6)(iv), so the supply may not qualify as a zero-rated export under section 16.
• Third party: A receipt from a payer not named in the contract may be held or queried until the AD bank is satisfied under regulation 8.

If a client is late or pays short, write to your AD bank before the deadline citing reasons; it may extend the realisation period under regulation 5(1) or allow a reduction under regulation 6. See extension of the export realisation period and reduction in export invoice value.

The timeline for freelance contract payment terms runs from the invoice date. The EDF is due within 30 days from the end of the invoice month, payment must be realised within 9 months of the invoice, and under an LUT GST becomes payable if payment is still missing after one year or the extended FEMA period.

• No due date: Leaving payment "on completion" with no number of days, which makes it hard to chase payment before the 9-month limit.
• Vague payer: Allowing payment from "the client or any affiliate" without telling your AD bank, which can turn a routine receipt into a third party query.
• Old limits: Relying on the fifteen-month period that appeared in the 2026 regulations before the 22 September 2026 amendment restored nine months.
• Silent charges: Saying nothing about bank charges, so every receipt arrives short of the invoice and needs reconciling.
• Advance drift: Taking an advance through one bank and the balance through another without informing both banks.
• Generic scope: Describing the work as "services" only, which makes the purpose code and place of supply harder to support.
• No exit terms: Having no cancellation clause, leaving no basis to keep part of an advance or to seek a reduction in export value. See refund of advance export payment.

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB dated 13 January 2026, amended up to 22 September 2026, Regulations 1(2), 2(1) Explanation, 3(2), 4(1), 4(2), 5(1), 5(2), 6, 8, 10(1), 10(4), 13, 18(1)(i), 18(2); footnotes 2 to 5 on FEMA 23(R)/(1)/2026-RB (checked 9 Oct 2026)
2. RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Paras 1, 4 and 7: regulations and directions effective 1 October 2026; Master Directions superseded (checked 9 Oct 2026)
3. Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, FEMA 14(R)/2023-RB, amended up to 12 February 2025, Regulation 3(2)(I)(a)(i) to (iii) (checked 9 Oct 2026)
4. RBI A.P. (DIR Series) Circular No. 84: Compilation of R-Returns, Reporting under FETERS, 29 February 2012, Para 3: purpose codes for all foreign exchange transactions (checked 9 Oct 2026)
5. The Foreign Exchange Management Act, 1999 (text hosted by IFSCA), Section 13(1) (checked 9 Oct 2026)
6. Integrated Goods and Services Tax Act, 2017: Section 2 (Definitions), Clause (6), export of services, sub-clauses (i) to (v) (checked 9 Oct 2026)
7. Integrated Goods and Services Tax Act, 2017: Section 16 (Zero rated supply), Sub-sections (1)(a) and (3) (checked 9 Oct 2026)
8. Central Goods and Services Tax Rules, 2017: Rule 96A (Export under bond or Letter of Undertaking), Sub-rule (1)(b) as substituted by Notification 12/2024-CT (checked 9 Oct 2026)
9. Central Goods and Services Tax Rules, 2017: Rule 34 (Rate of exchange of currency), Sub-rule (2) (checked 9 Oct 2026)
10. Central Goods and Services Tax Rules, 2017: Rule 47 (Time limit for issuing tax invoice), Main rule: thirty days from the date of supply of service (checked 9 Oct 2026)
11. CBIC Circular No. 202/14/2023-GST: Clarification relating to export of services, sub-clause (iv) of section 2(6) of the IGST Act, 27 October 2023 (copy forwarded by the Nagaland Taxes Department), Paras 3.1 to 3.3 and clarification on Special Rupee Vostro Account receipts (checked 9 Oct 2026)
12. Form 67 FAQ, Income Tax e-filing portal, Q1 and Q6 (checked 9 Oct 2026)
13. Objective and scope of the New Act, Income Tax e-filing portal, FAQ 2: 1961 Act repealed on 1 April 2026 (checked 9 Oct 2026)