Monthly Retainer Invoices Under GST: How Agencies and Consultants Should Bill Retainers, Pick the Invoice Date, and Track Unpaid Months

Raise one GST tax invoice for each retainer month, on or before the payment due date in your contract. GST is due for the month you raise the invoice, or the month you receive payment if that comes first, whether or not the client has paid.

That's the short answer. The rest of this post covers what the invoice should say, how advance and arrears billing change the date, how to bill extra work, and how to see which months each client still owes.

Why a retainer counts as a "continuous supply" under GST#

Most retainers run for months, often a year, with a fixed fee every month. GST calls this a continuous supply of services. Roughly, that means services given regularly under a contract longer than three months, with payments due at regular intervals.

This matters because the invoice timing rules for continuous supply are a little different from one-off jobs:

• If the contract fixes a payment due date (say, "fee payable by the 5th of every month"), raise the invoice on or before that due date.
• If the contract has no clear due date, raise the invoice before or at the time you receive payment.
• If payment is linked to finishing something (say, a monthly report), raise the invoice on or before the day that work is finished.

So the first thing to check is your retainer agreement. Ideally it should state the monthly fee, when it's billed and when it's due. If it doesn't, add this clause when you renew. It makes your GST dates simple.

When GST is actually due on a retainer#

Your GST liability arises at the time of supply. For services, that is usually the earlier of:

1. the invoice date, if you raised the invoice on time, or
2. the date you received payment.

In practice, for most agencies: you pay GST in the month you raise the invoice. You report it in GSTR-1 and pay it through GSTR-3B for that period, even if the client pays 45 days later.

An example. A Pune digital agency bills a Mumbai client ₹60,000 + GST on 1 July for July's work. The client pays on 20 August. The agency still pays GST on ₹60,000 in its July return. That's why unpaid retainers hurt twice: you're short of the fee and you've already paid the tax.

If the client pays before you invoice (a quarterly advance, say), GST on services is due when you receive the money. You issue a receipt voucher at that point and adjust it in the monthly invoices later. Your CA will know how to show this in your returns.

Advance billing vs arrears billing#

Agencies do it both ways. Both are fine under GST as long as the invoice date follows your contract.

Billing in advance (start of month)

• Invoice dated 1 April for "Retainer fee for April".
• GST falls in April.
• Better for cash flow. Most clients accept it for fixed scopes like social media management or SEO.

Billing in arrears (end of month)

• Invoice dated 30 April, or the first few days of May, for "Retainer fee for April".
• GST falls in the month of the invoice.
• Common for consultants whose fee depends on hours or deliverables actually completed.
• Don't wait too long. For services, the general rule is to invoice within 30 days of the supply, so don't let April's invoice drift into June.

Starting or ending mid-month If a retainer of ₹45,000 a month starts on 16 June, bill the part month pro rata (about ₹22,500 for 15 days of a 30-day month). Write the dates on the invoice, e.g. "16–30 June 2025". It saves arguments later.

What a retainer invoice must say#

A retainer invoice is a normal GST tax invoice. It needs all the usual mandatory fields:

• Your name, address and GSTIN
• A unique invoice number in your series for the financial year
• Invoice date
• Client's name, address and GSTIN (for a registered client)
• Place of supply (state name)
• SAC code for your service
• Description of the service
• Taxable value
• GST rate and amount, shown as CGST + SGST (client in your state) or IGST (client in another state)
• Whether tax is payable on reverse charge (normally "No" for agency services)
• Signature or digital signature

For retainers, the description line does most of the work. Make it specific:

Retainer fee – Social media management for July 2025 (1–31 July), as per agreement dated 1 April 2025

Not just "Professional fees". A clear period on every invoice helps the client's accounts team approve it fast. It helps your CA too, and it helps you when a client says "we already paid July".

A quick tax example: a Delhi agency bills a Delhi client ₹50,000 a month. If the rate for your service is 18%, the invoice shows CGST ₹4,500 + SGST ₹4,500, total ₹59,000. Bill a Bengaluru client the same fee and it shows IGST ₹9,000. Always check the correct rate for your SAC.

Two more things to keep in mind:

• TDS: many corporate clients deduct TDS on professional or technical fees before paying. Your invoice stays the same. You just record the short payment against it and match it with Form 26AS later.
• E-invoicing: if your turnover is above the e-invoicing limit, B2B retainer invoices need an IRN. Check the current limit on the GST portal, as it has been lowered over the years.

Extra work beyond the retainer#

Every agency knows this one. The retainer covers 12 posts a month. Then the client asks for a Diwali campaign film.

You have two clean options:

1. Separate invoice for the extra work. Best when it's a large, one-off piece with its own approval, or when the client's PO is different.
2. Separate line item on the same month's invoice, e.g. "Additional: Diwali campaign video (approved on 12 Oct)". Fine for small add-ons.

Whichever you pick, don't fold extra work into the retainer line. Keep it separate so:

• the client can see exactly what's in the fixed fee and what's extra,
• you can show the approval if questioned,
• your revenue reports show how much "scope creep" each client really brings.

And if a retainer month is cut short or a client disputes part of a fee after you've invoiced, don't edit the old invoice. Issue a credit note against it.

How to track which months each client still owes#

Agencies with 10–20 retainer clients usually lose track here. Payments come in odd amounts, some net of TDS, some covering two months together. A simple month-by-client grid fixes most of it:

A few habits that keep it accurate:

• Record every payment against a specific invoice, not just "received ₹1,00,000 from GreenLeaf". If a payment covers two months, split it.
• Mark TDS separately so a month that's short only because of TDS isn't chased as unpaid.
• Review the grid on a fixed day, say the 10th of every month, and send reminders for anything older than your credit period.
• Pause extra work (not the retainer itself, unless the contract allows) once a client crosses two unpaid months. Put this rule in your agreement.

If you're doing this in spreadsheets, it works until it doesn't. In Clyrix, you raise GST invoices with CGST/SGST/IGST shown clearly, record payments against each client's project, and hand your CA a GSTR-1 export at month end. So the "who owes which month" view comes from the invoices themselves, not a separate sheet.

A quick monthly routine#

1. On billing day (1st or month end, as per contract): raise every retainer invoice with the month in the description.
2. Same week: raise separate invoices or line items for approved extra work.
3. On the 10th: check the unpaid-months grid and follow up.
4. Before your GSTR-1 date: share all invoices and credit notes with your CA.
5. Every quarter: match TDS deducted by clients with Form 26AS.

That's it. Fixed fee, fixed date, clear description, payments tied to invoices. Retainers become the easiest part of your billing.