A Running Account (RA) bill — also called an interim payment certificate or progress bill — is how a contractor gets paid for work in progress on a long-running contract. Instead of one payment at the end, the contractor raises periodic bills (often monthly) for the work completed so far. Getting the RA bill right is the single most important commercial task on a live project: it decides cash flow, and errors quietly leak margin every cycle.
What an RA bill actually is
The defining feature of an RA bill is that it is cumulative. Each bill certifies the total value of work done from the start of the project up to the cut-off date, then deducts the value already certified in all previous RA bills. The difference is the gross value of this bill.
This bill (gross) = (Cumulative value of work done to date) − (Cumulative value certified in previous RA bills). All deductions and recoveries are then applied to arrive at the net payable.
Step 1 — Measure and record the work
Quantities come from the Measurement Book (MB), the statutory record of what was physically executed. For each BOQ item you record the measurements — chainage, and nos × length × breadth × depth — and abstract them into a quantity in the item's unit. A cardinal rule: you can only bill what is measured and recorded in the MB. Un-measured work is un-billable work.
Step 2 — Value the work against the BOQ
Multiply each item's cumulative executed quantity by its contract (BOQ) rate to get the cumulative value per item. Sum across items for the cumulative value of work done. Handle deviations carefully: quantities executed beyond the BOQ quantity may attract a deviation clause, and entirely new items need a rate (agreed star-rate / derived rate) before they can be billed.
Step 3 — Apply deductions and recoveries
The gross value is rarely what gets paid. Typical deductions on an Indian construction RA bill include:
- Retention / security deposit — a percentage (commonly 5–10%) withheld from each bill up to a ceiling, released after the defect-liability period.
- Mobilisation-advance recovery — recovery of an interest-bearing advance, usually pro-rata to work done.
- Secured / material-advance recovery — recovery of advances given against materials brought to site.
- TDS (income tax) — deducted under the Income-tax Act on the taxable value.
- GST TDS (for government clients) — 2% under Section 51 of the CGST Act, where applicable.
- Hold / withheld amounts — against open NCRs, unresolved quality issues or pending documentation.
- Statutory / contractual levies — labour cess (BOCW), water/electricity, or other agreed deductions.
Retention that's never released, advance recoveries that outrun the agreed schedule, and escalation that's never claimed are the three quiet drains on a contractor's margin. A billing system that tracks each of these as a ledger — not a spreadsheet cell — is how you plug them.
Step 4 — Add escalation (if the contract allows)
Many infrastructure contracts include a price-adjustment (escalation) clause tied to published indices (e.g. RBI / WPI, cement, steel, POL, labour). Escalation is computed on the net work done in the billing period against a base index, using the contract's price-adjustment formula. Track the base indices and the period indices meticulously — escalation is a legitimate recovery that is routinely under-claimed.
Step 5 — GST and the tax invoice
A works contract is a supply of service under GST. The certified value attracts GST at the applicable rate; for most works contracts this is 18%. GST is added on top of the gross bill value (after escalation, before income-tax TDS is netted from the payment). See our GST-on-works-contracts guide for rates, input-tax credit and reverse charge.
Step 6 — Certification chain
An RA bill is only as good as its certification. The measured quantities and the bill move through a defined chain — typically Site Engineer → Quantity Surveyor → Project Manager → the client's Engineer / PMC for certification. Each stage checks measurements, rates and deductions. Multi-tier e-signature sign-off, with who-signed-what captured, turns this from an email trail into an audit-ready record.
A minimal worked example
| Line | Amount (₹) |
|---|---|
| Cumulative value of work done to date | 1,20,00,000 |
| Less: value certified in previous RA bills | 85,00,000 |
| Gross value of this RA bill | 35,00,000 |
| Add: price escalation this period | 1,40,000 |
| Less: retention @ 5% | 1,75,000 |
| Less: mobilisation-advance recovery | 2,00,000 |
| Less: income-tax TDS | 72,800 |
| Net payable (before GST settlement) | 31,92,200 |
Common mistakes that cost you
- Billing un-measured work — it gets disallowed at certification and delays the whole bill.
- Losing track of cumulative figures across bills, so an item is over- or under-billed.
- Forgetting to claim escalation, or claiming it on the cumulative instead of the period value.
- Retention and advances tracked in a spreadsheet that no one reconciles at final account.
- Re-keying quantities from the MB into the bill — every re-key is a chance to leak.
In InCore the BOQ item is the spine: quantities booked in the field post to the Measurement Book, and the MB feeds the RA bill directly — no re-keying. Retention, advances and escalation each run as their own ledger, and the certification chain is a multi-tier e-signature sign-off. The final account reconciles automatically.