Agency Agreement (India)
AGENCY AGREEMENT
Indian Contract Act 1872 (Sections 182–238) | Income Tax Act 1961 (Section 194H) | CGST Act 2017
This Agency Agreement ("Agreement") is entered into on [Agreement Date] between:
PRINCIPAL: [Principal Name] (PAN: [Principal PAN]), GSTIN: [Principal GSTIN], registered at [Principal Address] (the "Principal"); and
AGENT: [Agent Name] (PAN: [Agent PAN]), GSTIN: [Agent GSTIN], at [Agent Address] (the "Agent").
1. APPOINTMENT AND AUTHORITY
1.1 The Principal hereby appoints the Agent as its [Exclusivity Type] agent for the territory of [Territory] in respect of: [Agency Scope].
1.2 The Agent is appointed for a term of [Agency Term] from the Agreement Date, subject to termination under Clause 8.
1.3 The Agent's authority is as follows: [Agent Authority]. The Agent shall not hold itself out as having any authority beyond what is expressly granted in this Agreement. The Principal shall be bound by acts of the Agent within the scope of this authority in accordance with Sections 182–238 of the Indian Contract Act 1872.
2. AGENT'S DUTIES
2.1 The Agent shall: (a) conduct the business of the agency in accordance with the Principal's instructions under Section 211 of the Indian Contract Act 1872; (b) use reasonable skill and diligence in promoting the Principal's products and services under Section 212; (c) render proper accounts to the Principal on demand under Section 213; (d) communicate with the Principal in cases of difficulty under Section 214; and (e) not deal on their own account without the Principal's prior written consent under Section 215.
2.2 The Agent shall not make or accept any secret profit, gift, or benefit from any third party in connection with the agency. Any such benefit shall be accounted for and paid to the Principal under Section 216 of the Indian Contract Act 1872.
2.3 The Agent shall comply with all applicable laws, including the Competition Act 2002, and shall not engage in any conduct that could expose the Principal to regulatory liability.
3. COMMISSION AND TAX
3.1 The Principal shall pay the Agent commission at [Commission Rate]% of the invoice value (excluding GST) of transactions facilitated by the Agent, calculated [Commission Trigger].
3.2 TDS: The Principal shall deduct TDS at 5% on commission payments under Section 194H of the Income Tax Act 1961, deposit it with the Income Tax Department, and issue Form 16A to the Agent.
3.3 GST: The Agent shall charge GST at 18% on commission invoices where GST-registered, and shall issue compliant tax invoices under the CGST Act 2017. The Principal may claim Input Tax Credit on GST paid.
3.4 Commission will be settled monthly within 15 days after the end of each month, along with a commission statement.
4. CONFIDENTIALITY
4.1 The Agent shall keep confidential all Confidential Information of the Principal (including pricing, customer lists, business strategies, and trade secrets) and shall not disclose it to any third party or use it for any purpose other than the agency.
4.2 This obligation shall survive termination for 3 years. Where Confidential Information includes personal data, the Agent shall comply with the Digital Personal Data Protection Act 2023.
5. PRINCIPAL'S OBLIGATIONS
5.1 The Principal shall: (a) provide the Agent with all necessary information, materials, and support to carry out the agency; (b) inform the Agent promptly of any change in pricing, product availability, or trading terms; (c) deal with all orders and enquiries forwarded by the Agent promptly; and (d) pay commission promptly in accordance with Clause 3.
5.2 The Principal shall indemnify the Agent against all reasonable costs and losses incurred by the Agent acting within the scope of their authority on the Principal's behalf.
6. IP AND BRANDING
6.1 The Principal grants the Agent a non-exclusive, non-transferable licence to use the Principal's trademarks, trade names, and marketing materials solely for the purposes of the agency in the Territory.
6.2 The Agent shall use the Principal's branding only in the manner approved by the Principal and shall not alter, adapt, or sublicence any of the Principal's IP.
6.3 All goodwill generated through use of the Principal's branding shall accrue exclusively to the Principal.
7. LIABILITY
7.1 The Principal shall not be liable to the Agent for any indirect, consequential, or special losses arising from this Agreement.
7.2 The Agent shall indemnify the Principal against any loss, damage, or liability arising from the Agent's breach of this Agreement, negligence, wilful misconduct, or acts outside the scope of their authority.
8. TERMINATION
8.1 Either party may terminate this Agreement without cause by giving [Notice Period] written notice to the other party, in accordance with Section 205 of the Indian Contract Act 1872.
8.2 Either party may terminate immediately upon written notice if the other party commits a material breach and fails to remedy it within 15 days of written notice.
8.3 The Principal shall notify all third parties who have dealt with the Agent of the termination of the Agent's authority, in accordance with Section 208 of the Indian Contract Act 1872. The Principal remains bound to third parties who dealt with the Agent in good faith before receiving notice of termination.
8.4 Upon termination, the Agent shall return all Confidential Information, cease using the Principal's IP, and deliver all outstanding commissions earned but not yet paid.
9. GOVERNING LAW AND DISPUTE RESOLUTION
9.1 This Agreement is governed by the laws of India and the laws of the State of [Governing State].
9.2 Any dispute shall be referred to and finally resolved by arbitration under the Arbitration and Conciliation Act 1996, seated at [Arbitration City]. A sole arbitrator shall be appointed by mutual agreement. The language of arbitration shall be English.
9.3 This Agreement shall be executed on non-judicial stamp paper as required under the Indian Stamp Act 1899 and the applicable state stamp act of [Governing State].
Principal
________________
Signature
Agent
________________
Signature
What Is a Agency Agreement (India)?
A Agency Agreement (India) in India an Agency Agreement is a legally binding contract under which one party (the principal) appoints another party (the agent) to act on their behalf in commercial or business transactions in India. In India, agency law is thoroughly codified in Sections 182 to 238 of the Indian Contract Act 1872, which defines agency, sets out the duties and liabilities of agents and principals, and governs the termination of agency relationships.
Section 182 of the Indian Contract Act 1872 defines an 'agent' as a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done or who is so represented is called the 'principal'. The central legal consequence of an agency relationship is that acts done by the agent within the scope of their authority bind the principal as if the principal had done those acts themselves.
Commercial agency arrangements in India span a wide range: sales agents who sell goods on behalf of manufacturers, marketing agents who promote products in specific territories, collection agents who collect receivables, and authorised representatives who conduct business on behalf of foreign principals. Each type of agency arrangement requires a carefully drafted agreement that defines the agent's authority, obligations, commission, and accountability.
GST implications of agency arrangements are governed by the CGST Act 2017, including the concept of 'pure agent' under Rule 33 of the CGST Rules. Commission income of agents is taxable at 18% GST, and the agreement must address invoicing and GST compliance obligations.
The legal framework governing the Agency Agreement (India) in India draws on several key statutes and regulatory bodies. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Parties executing a Agency Agreement (India) in India should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Indian Contract Act, 1872 sets the foundational requirements.
When Do You Need a Agency Agreement (India)?
You need an Agency Agreement when you appoint an individual or company to act on your behalf — whether to sell your products, promote your brand, collect payments, or conduct business with third parties in your name.
You need this agreement when establishing a sales agency arrangement, where an agent will solicit and conclude orders for your products or services in a defined territory. A clear agreement prevents disputes about commission entitlements, territory exclusivity, and post-termination obligations.
You need this agreement when a foreign principal wishes to appoint an Indian agent to represent them in India. The agreement must address the agent's authority to bind the principal in contracts with Indian customers, and the principal's obligations to maintain appropriate GST registrations for transactions conducted by the agent in India.
You need this agreement when appointing a marketing or promotional agent who will advertise and promote your products but not enter into binding contracts on your behalf. In this case, the agent's authority should be clearly limited to promotional activities only.
You also need this agreement to confirm TDS compliance: commission payments to agents are subject to TDS under Section 194H of the Income Tax Act 1961 at 5%, and the agreement should document the commission structure to support correct TDS deductions by the principal.
Parties in India should prepare a Agency Agreement (India) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Agency Agreement (India)
A thorough India Agency Agreement should contain the following key elements.
Parties: Full legal names, addresses, PAN, and GSTIN of the principal and agent.
Appointment and territory: Clear appointment of the agent, the territory within which the agent is authorised to operate, and whether the appointment is exclusive or non-exclusive.
Authority: The specific authority granted to the agent — whether to bind the principal in contracts, to collect payments, to make representations, or limited to promotional activities only. This defines the scope of the principal's liability for the agent's acts.
Agent's duties: Obligations to act in the principal's best interests, to follow the principal's instructions, to maintain accounts, to report on activities, and to avoid conflicts of interest — aligned with Sections 211–218 of the Indian Contract Act 1872.
Commission: The commission rate (percentage of sales or fixed fee), the basis on which commission is calculated (on orders placed, orders delivered, or payments received), when commission is earned and payable, and whether commission is subject to TDS under Section 194H.
GST: The GST treatment of commission, invoicing obligations, and pure agent reimbursement arrangements under Rule 33 of the CGST Rules 2017.
Exclusions and restrictions: Products, services, customers, or territories excluded from the agency, and restrictions on the agent representing competitors.
Term and termination: Duration, notice period, and consequences of termination including outstanding commission obligations.
Dispute resolution: Arbitration under the Arbitration and Conciliation Act 1996.
Governing law: Laws of India and the specified state.
Additional compliance elements for a Agency Agreement (India) used in India include: Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Forms-legal.com provides this template as a starting point for India-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Agency Agreement (India) (India) [Legal document template]. Forms Legal. https://forms-legal.com/india/business/contracts/agency-agreement-india
"Agency Agreement (India) (India)." Forms Legal, 2026, https://forms-legal.com/india/business/contracts/agency-agreement-india.
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title = {Agency Agreement (India) (India)},
year = {2026},
howpublished = {\url{https://forms-legal.com/india/business/contracts/agency-agreement-india}},
note = {Free legal document template. Based on Indian Contract Act, 1872}
}Also available for these jurisdictions:
Frequently Asked Questions
The duties of an agent in India are comprehensively set out in Sections 211 to 218 of the Indian Contract Act 1872, which form the statutory framework for agency law. Section 211 requires the agent to conduct the business of the agency according to the directions given by the principal. Where no directions are given, the agent must follow the custom prevailing in the same kind of business at the place where the agent conducts such business. Where the agent acts otherwise, they become liable to compensate the principal for any loss. Section 212 imposes a duty of skill and diligence. An agent must conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business, unless the principal has notice of the agent's want of skill. An agent must exercise reasonable care and diligence, and is liable for losses resulting from their negligence or want of skill. Section 213 requires the agent to render proper accounts to the principal on demand. Section 214 requires the agent to communicate with the principal in cases of difficulty. Where the agent is in a situation where it would be normal to consult the principal, and communication is possible, the agent must do so before acting. Section 215 prohibits the agent from dealing on their own account without the principal's consent. An agent cannot buy for themselves what the principal has directed them to sell, or sell from their own stock what the principal has directed them to buy, without full disclosure to and consent of the principal.
Termination of agency in India is governed by Sections 201 to 210 of the Indian Contract Act 1872. Understanding these provisions is essential for drafting effective termination clauses in an agency agreement. Section 201 sets out the ways in which an agency is terminated: (a) by revocation by the principal; (b) by the agent renouncing the business of the agency; (c) by the business of the agency being completed; (d) by either the principal or agent dying or becoming insane; and (e) by the principal being adjudicated an insolvent under insolvency law. Section 202 creates an important exception: where the agent has an interest in the subject matter of the agency (e.g., where the agent has advanced money on behalf of the principal), the principal cannot revoke the agency to the detriment of such interest. This is known as 'agency coupled with interest' and survives the principal's death or insanity. Section 203 provides that the principal may revoke the authority of the agent at any time before the authority has been exercised so as to bind the principal, subject to liability for compensation. Section 205 requires reasonable notice before revocation or renunciation. Failure to give reasonable notice makes the party at fault liable for compensation for any resulting loss. Section 208 provides that revocation of the agent's authority does not, of itself, affect third parties who have dealt with the agent without notice of the revocation.
GST treatment of agency arrangements in India is governed by the Central Goods and Services Tax Act 2017 (CGST Act) and is complex, particularly in relation to the concept of 'pure agent' and the treatment of commission income. Commission earned by the agent on transactions conducted on behalf of the principal is subject to GST at 18% under the CGST Act 2017, as it constitutes a supply of 'commission agent services' (SAC code 99711 for financial intermediation and allied activities, or other applicable SAC codes). The agent must be GST-registered if their annual turnover from commission and other supplies exceeds ₹20 lakh (₹10 lakh for special category states) and must issue compliant GST tax invoices for all commission income. Where the agent acts as a 'pure agent' under Rule 33 of the CGST Rules 2017 — meaning the agent makes a supply on behalf of the principal and receives reimbursement of exact costs from the principal without any markup — the reimbursed expenses are excluded from the agent's taxable value. This exemption applies only where: (a) the agent acts as a pure agent in relation to that supply; (b) the third party actually supplied the goods or services to the recipient (the principal); and (c) the reimbursement does not include any profit element. The agency agreement should clearly distinguish between commission (taxable at 18%) and pure agent reimbursements (potentially excluded).
A Agency Agreement (India) does not legally require a lawyer in India, and individuals and businesses may draft and execute the document independently. The Indian Contract Act, 1872 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified India lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of India has jurisdiction over disputes arising from this type of document, and Registrar of Companies (ROC) may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
A Agency Agreement (India) does not legally require a lawyer in India, though legal advice is recommended. Under Indian law, the Indian Contract Act 1872 governs agreements. The Companies Act 2013 and Registrar of Companies (ROC) regulate corporate documents. The Information Technology Act 2000 governs electronic contracts and data protection. The Consumer Protection Act 2019 provides consumer rights. The Income Tax Act 1961 requires tax compliance. Forms-legal.com provides this template as a starting point — always review with a qualified Indian advocate for significant transactions. Under India law, Indian Contract Act, 1872, parties should seek independent legal advice from a qualified lawyer to confirm compliance with all applicable requirements. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). Forms-legal.com provides this template as a starting point for India-compliant documentation.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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