Freelance Milestone Payment Examples With Real Splits

You have agreed a ₹1,50,000 website with a new client and now you have to write the payment line. Many freelancers type "50% advance, 50% on delivery" because it is quick, then discover on invoice day that nobody told them what GST and TDS do to each payment. This post gives you freelance milestone payment examples with real splits: three worked schedules, each with the GST, the TDS and the cash that actually lands in your account, plus a kill-fee clause you can adapt.

Every rupee figure below is an illustration, not a standard or a typical split. Pick the shape that matches how much risk you carry, then run your own numbers. General information, not tax or legal advice.

A good milestone split matches the risk you carry at each stage

There is no correct split. The right one puts enough money in your hands before you spend time that you would hate to lose, and ties every later payment to something the client can see and approve. Three shapes are worked through below: 40/30/30 for a mid-sized build, 50/50 for a short job, and four equal parts for a long one. The general rules for choosing the number of milestones and writing checkable definitions are in the guide to a freelance milestone payment schedule. This post is the worked-numbers companion to it.

The tables assume you are registered for GST and charge 18% on the fee, and that your client deducts 10% TDS on professional fees. If you are unregistered, drop the GST column. If your client is not a deductor, drop the TDS column.

40/30/30 suits a website because the money follows the approvals

On a ₹1,50,000 website, a 40/30/30 split asks for ₹60,000, ₹45,000 and ₹45,000. The first payment is the advance, due when the contract is signed and the brief is agreed. The second is due when the client approves the designs. The third is due when the site is live and handed over. Each trigger is something the client can say yes to in writing.

Milestone 1 is ₹60,000 plus ₹10,800 GST, less ₹6,000 TDS, so ₹64,800 reaches you. Milestones 2 and 3 are each ₹45,000 plus ₹8,100 GST, less ₹4,500 TDS, so ₹48,600 each. Across the project you invoice ₹1,77,000, the client deducts ₹15,000 of TDS, and you receive ₹1,62,000. The front-loaded 40 percent covers the weeks of design work before the client has approved anything. It also means the final 30 percent is the only money still at stake on handover day.

Hold back the source files and the live login until milestone 3 is paid, and say so in the contract. The free freelance contract template has a payment schedule section where you can write these triggers in.

50/50 works for a short design project when the first half is a proper advance

For a ₹40,000 design job, 50/50 means ₹20,000 to start and ₹20,000 on final delivery. The first half is an advance, so GST on it falls due when you receive it and you issue a receipt voucher, not a normal invoice. The detail on that is in the guide to the advance payment invoice. Each half carries ₹3,600 GST, so the client pays ₹23,600 each time before any TDS.

TDS is the interesting part here. The 10 percent threshold is ₹50,000 of fees in a financial year, and your two payments total only ₹40,000. If this is the only money that client pays you this year, no TDS applies and you receive the full ₹23,600 twice. If the same client already paid you ₹20,000 earlier in the year, your first payment here takes the total to ₹40,000, still under the limit, and the second takes it to ₹60,000. TDS then applies on the whole amount, so the client may deduct ₹6,000 from that second payment, leaving ₹14,000 plus the ₹3,600 GST, which is ₹17,600. Ask the client's accounts team how they track it.

Tie the second half to delivery of the final files, not to the client's mood. "Final files delivered by email" is checkable. "Client is happy" is not.

25/25/25/25 suits a long build because no single payment is large enough to hurt

On a ₹4,00,000 build over several months, four equal payments of ₹1,00,000 spread the risk evenly. Each one is ₹1,00,000 plus ₹18,000 GST, less ₹10,000 TDS, so ₹1,08,000 reaches you. Over the whole project that is ₹4,72,000 invoiced and ₹40,000 of TDS deducted, so you receive ₹4,32,000 in cash across the four payments, and the ₹72,000 of GST in that cash is owed onward to the government.

The first quarter is due on signing. The other three attach to working deliverables, for example the core features running on a staging site, the second feature set passing the client's review, and final deployment with handover. Avoid dates as triggers on a long build. A client who is slow to give feedback will push the date past the work, and you end up funding their delay. Pin each payment to an event instead, and add a rule that a milestone counts as accepted if the client has not replied within the review window, as the milestone schedule guide explains.

Each milestone invoice is a separate GST event, so raise it when the milestone is met

For services, GST time of supply is the earlier of the invoice date and the date you receive payment, as long as you invoice within the permitted period. That period is 30 days from supplying the service. So raise each milestone invoice when the milestone is met, and no later than 30 days after. Under section 13 of the CGST Act, if you invoice late, the tax point becomes the earlier of the service date and the payment date, which can pull the GST into an earlier month than you expected.

An advance is the exception to waiting. GST on an advance for services falls due when the money arrives, and the document is a receipt voucher under Rule 50. The full 30-day logic, with examples, is in the guide to the 30-day invoice rule. The wider invoice basics sit in the GST invoice guide for freelancers.

TDS is cut on the fee before GST, and the client pays you the GST in full

Professional fees attract 10 percent TDS once a client's payments to you cross ₹50,000 in a financial year. From 1 April 2026 this sits in section 393 of the Income-tax Act 2025, with the same 10 percent rate and ₹50,000 threshold as before. When GST is shown separately on the invoice, TDS is worked out on the fee excluding GST, per CBDT Circular 23/2017. So on ₹1,00,000 plus ₹18,000 GST, the client deducts ₹10,000, not ₹11,800, and pays you ₹1,08,000. Confirm the current rate and threshold with your CA before you quote net figures to a client.

Once the ₹50,000 threshold is crossed, TDS applies on every later milestone, not once at the end, because each invoice or payment is a separate credit. The ₹6,000 deducted from your first website payment appears as credit in your Form 26AS and then in your return, so you are not paying it twice. The guide to reconciling AIS and Form 26AS shows how to check that every deduction arrived. The client pays you the GST in full, so the cash that lands is short only by the TDS. Set the GST aside from every payment, and work out advance tax on your total income, counting the TDS credit in Form 26AS against it. The monthly tax set-aside guide covers that habit.

A kill fee should be a stated, reasonable sum tied to work already done

A kill fee is the amount the client owes you if they cancel after you have started. Write it as a percentage of the unpaid fee or a fixed sum, and tie it to the work already done. A court is not bound by a number you pick: section 74 of the Indian Contract Act allows reasonable compensation up to the sum named, and a court can reduce a penalty. So a fee that looks arbitrary is the one most likely to be cut down. Do not assume a kill fee is guaranteed to be enforced as written.

Here is sample wording as an illustration. "If the client cancels after the project starts, the advance already paid is retained as payment for work done to that date. Where work completed exceeds the advance, the client will pay for the additional work at the agreed rate, plus 10% of the unpaid project fee to cover reserved time." Have a lawyer read the final clause before you rely on it. The related cases are covered in the guide on a client cancelling before work starts and in the termination clause guide.

Raise each milestone invoice from the project so nothing is billed twice

Rinto can generate an invoice straight from a project, so each milestone invoice starts from the project record. It pulls in the project's billable, un-invoiced tasks and unbilled time entries and marks them as billed, so they cannot be invoiced twice. Invoices carry GST-ready tax lines, and you mark each one paid yourself when the money arrives. Rinto does not give tax or legal advice, file returns or process payments. The guide to invoicing from a project shows the steps.

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