Who owns the intellectual property created by an intern in India?

Without an explicit IP assignment clause, the intern — as the creator — may own IP rights under the Copyright Act 1957 and Patents Act 1970. Always include a clear clause assigning all IP created during the internship to the company, signed as part of the internship agreement.

Can interns file a complaint under POSH Act in India?

Yes. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (POSH Act) defines 'aggrieved woman' to include temporary employees, interns, and visitors. Companies must include interns in their POSH policy.

What happens if an intern breaks the confidentiality clause?

If an intern breaches a confidentiality clause in a signed internship agreement, the company can file a breach of contract suit in court and seek damages. They can also seek an injunction to prevent disclosure of confidential information.

HR & Employment

Internship Agreement Guide India: Template, Clauses & Legal Validity

Q: Is an internship agreement legally binding in India?

Yes, an internship agreement is a legally binding contract in India once signed by both parties. It is governed by the Indian Contract Act 1872. While interns are not classified as employees under most labour laws, the agreement creates enforceable rights and obligations between the company and intern.

Q: Is a company required to pay a stipend to interns in India?

There is no statutory minimum stipend for interns in India (unlike employees who have minimum wage protection). However, an unpaid internship could be challenged if the intern performs regular employee duties. The National Policy on Skill Development recommends stipends, and many states have issued advisories. Always document stipend terms clearly.

February 26, 2026•7 min read

Internship Agreement Guide India: Template, Clauses & Legal Validity

Most Indian companies treat internship agreements as a formality — a printed form the intern signs on day one. This is a major mistake. Without a properly drafted internship agreement, companies risk IP disputes, confidentiality breaches, POSH liability, and regulatory exposure. This guide covers every clause your internship agreement must have.

Is an Internship Agreement Legally Binding in India?

Yes. An internship agreement is a legally binding contract under the Indian Contract Act 1872, provided it has: (1) offer and acceptance, (2) consideration (even a stipend of ₹1), (3) parties with legal capacity. While interns are generally not "employees" under the Industrial Disputes Act or the Factories Act, the agreement creates enforceable rights and duties.

Intern vs Employee: The Critical Distinction

This distinction determines which labour laws apply:

Genuine intern: Learning-oriented, supervised, temporary, receiving training (not just working). Labour law protections (EPF, ESI, gratuity, minimum wage) generally do not apply
De facto employee: Doing full-time productive work, supervised like an employee, replaceable only by hiring. Risk of all labour protections being triggered even without formal employment

If your intern is doing regular employee work without employee benefits, you face significant legal and reputational risk. Structure the role as genuinely educational.

10 Must-Have Clauses in an Internship Agreement

1. Duration and Schedule

Specify start date, end date, and working hours. State clearly whether it is part-time (X hours/week) or full-time. This limits liability and sets expectations for both parties.

2. Stipend and Reimbursements

State monthly stipend amount, payment date, and what expenses (travel, meals) are reimbursable with receipts. Note: TDS applies if stipend exceeds ₹2.5 lakhs annually. No statutory minimum exists, but interns can enforce a contractually committed stipend.

3. Scope of Work and Learning Objectives

Define specific projects and tasks. A clear scope prevents scope creep and helps establish the educational nature of the internship — critical if the arrangement is ever challenged as an employment relationship.

4. Intellectual Property Assignment

This is the most commonly missed clause. Under Indian copyright law, the author is the first owner — even if work is created during an internship. Include: "All work product, inventions, code, content, designs, and IP created by the Intern in connection with the internship shall be the exclusive property of the Company."

5. Confidentiality and NDA

Interns access sensitive business information, client data, trade secrets, and technical systems. Include a mutual NDA covering: what is confidential, obligations during and after internship, exceptions (public domain, prior knowledge), and return of materials.

6. POSH Policy Acknowledgment

The POSH Act applies to interns. Include a clause: "The Intern acknowledges receipt of the Company's POSH Policy and agrees to comply with its provisions throughout the internship." This reduces liability and demonstrates compliance.

7. Data Protection / DPDP Act Compliance

If interns access personal data (customer records, employee databases), include data handling obligations consistent with India's Digital Personal Data Protection Act 2023 — limiting use to job scope only.

8. No Employment Guarantee

Expressly state: "Completion of the internship does not guarantee employment with the Company." This manages expectations and prevents claims of implied employment promises.

9. Social Media and Non-Disclosure of Work

Restrict interns from posting about client work, internal processes, or confidential projects on social media. Include approval requirements before any company-related content is published.

10. Termination Clause

Allow either party to terminate with 7–14 days' notice (or immediately for breach). Specify what happens to stipend, incomplete projects, and return of company property on termination.

Stipend and Tax Rules

No statutory minimum stipend for interns in India
Stipend of ₹2.5 lakhs+ annually requires TDS deduction by the company
Intern files ITR and can claim standard deduction against stipend income
Companies in tech/finance typically pay ₹10,000–₹50,000/month for good interns

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Key Takeaways

✅ Internship agreements are legally binding contracts under the Indian Contract Act
✅ Always include IP assignment — interns own their work by default under copyright law
✅ POSH Act applies to interns — include policy acknowledgment in the agreement
✅ No statutory minimum stipend, but contractually committed stipends are enforceable
✅ Include a clear "no employment guarantee" clause to manage expectations

Frequently Asked Questions

Is an internship agreement legally binding in India?

Yes. An internship agreement is a legally binding contract under the Indian Contract Act 1872 once signed by both parties. While interns are not employees under most labour laws, the agreement creates enforceable rights and obligations.

Is a company required to pay a stipend to interns in India?

There is no statutory minimum stipend for interns in India. However, an unpaid internship where interns perform regular employee duties could be legally challenged. Always document stipend terms clearly in the agreement.

Who owns the IP created by an intern in India?

Without an explicit IP assignment clause, the intern — as the creator — may own IP rights under the Copyright Act 1957. Always include a clause assigning all IP created during the internship to the company.

Can interns file a POSH complaint in India?

Yes. The POSH Act 2013 defines 'aggrieved woman' to include interns. Companies must include interns under their POSH policy and Internal Committee process.