RA bills in construction: what a running account bill has to contain
A running account bill is how a construction contract gets paid in stages without either side settling up until the end. The format looks like an invoice but behaves differently in one critical way: every RA bill is cumulative, and the payment is the difference. Getting that wrong is the most common cause of a disputed final bill.
This guide covers an area governed by tax or labour law, where rates, thresholds and prescribed formats change and vary by project type. It describes structure and process rather than quoting figures. Confirm anything that affects a filing with your CA or a labour law advisor before acting on it.
What makes an RA bill different from an invoice
An ordinary invoice is self-contained: it bills for a thing, and the amount due is the amount on the page. A running account bill is not. It states the total value of all work done on the contract up to that date, then subtracts everything already paid, and the remainder is what is being claimed now.
That structure exists because construction work is measured, not delivered. A quantity recorded in RA 2 may be corrected in RA 4 when the work is re-measured, and a cumulative format absorbs the correction automatically — the running total simply changes, and the next payment adjusts. A sequence of independent invoices cannot do that without issuing a credit note against an earlier one.
The practical consequence: RA bills are never deleted or amended in isolation. If RA 3 was wrong, it is corrected in RA 4.
- MeasurementItem · Unit · Qty to date
Quantity executed to date, against the agreed item and unit.
- Previous billLess: up to RA 2
Everything already certified in RA 1 and RA 2.
- This billNet quantity × rate
The difference — the only figure that becomes a payment.
- RetentionLess: retention @ 5%
The percentage held back until defect liability ends.
- Advance recoveryLess: advance adjusted
Mobilisation or material advance, recovered pro rata.
- Net payableAmount due
What actually leaves the account this cycle.
The columns an RA bill carries
Per item of work, a conventional RA bill carries this progression. The last column is the only one that generates money.
| Column | What it holds |
|---|---|
| Item / description | The work item, usually keyed to the BOQ or schedule of rates |
| Unit | Cum, sqm, rmt, nos — whatever the item is measured in |
| Rate | The agreed rate for that item, from the contract |
| Quantity up to date | Total measured quantity executed since the contract started |
| Quantity previous | What was certified in the last RA bill |
| Quantity this bill | Up to date minus previous — the increment |
| Value up to date | Rate × quantity up to date |
| Value previous | What was certified before |
| Value this bill | The difference, and the basis of this payment |
What sits below the item lines
The item lines produce a gross value. Four adjustments usually sit beneath them, and each is also cumulative.
- Retention — a percentage held back from each bill, released after the defect liability period. It is withheld from the cumulative value, not from the increment, which is why the retention line moves even in a bill with little new work.
- Mobilisation advance recovery — if an advance was paid at the start, it is recovered across the bills, usually as a percentage of each certification until it is cleared.
- Secured advance on materials — where the contract allows payment against materials delivered to site but not yet built in. Recovered as those materials get consumed.
- Deductions — statutory recoveries, labour cess where it applies, and anything the contract specifies such as water or electricity charges.
Measurement is the part that gets disputed
The arithmetic above is mechanical. The number that gets argued about is the measured quantity, and the defence against that argument is the measurement record — the measurement book, the joint measurement sheet, or whatever the contract names.
A measurement that is not recorded against a date and signed by both sides is not evidence. On a long contract, the quantity in RA 7 will be challenged against what was physically visible eight months earlier, and the only thing that settles it is a contemporaneous record.
This is also the reason the quantity-this-bill column is derived rather than entered. If someone types the increment directly, the cumulative figure stops being the sum of the measurements, and the final bill will not reconcile.
Tax on an RA bill
Construction work for a client is a works contract, and GST applies to the value certified in each RA bill rather than to the contract as a whole. The time of supply rules determine when that liability arises, and they are not always the date on the bill.
Rates differ by project type — affordable housing, other residential, government works and commercial work are not all treated the same, and the conditions attached to the concessional rates are specific. TDS under Section 194C and GST TDS under Section 51 may both apply depending on who the client is.
Those are the parts that change, so this guide does not quote figures. Confirm the applicable rate and the deduction obligations for your specific contract with your CA before the first RA bill goes out, because correcting it from RA 5 onwards is considerably more painful than getting RA 1 right.
A sanity check for the final bill
At closure, three numbers should agree: the sum of all value-this-bill amounts, the value-up-to-date on the final RA bill, and the total certified across the contract. If they do not, the break is almost always an RA bill where the increment was entered rather than derived, or one that was edited after certification.
Running that check at every bill rather than at the end turns a contract-level reconciliation into a two-minute one.
Common questions
What does RA stand for in RA bill?
Running Account. It refers to the account kept running between the contractor and the client across the life of the contract, settled progressively rather than at the end.
Why is an RA bill cumulative rather than for the period?
Because quantities get re-measured. A cumulative format absorbs a correction to an earlier measurement automatically — the running total changes and the next payment adjusts — where a series of independent invoices would need a credit note against a bill already paid.
How is retention handled in an RA bill?
Retention is withheld as a percentage of the cumulative certified value, not of the increment. It is held until the defect liability period ends, and is usually released in one or two tranches specified by the contract.
Can an RA bill be revised after it is certified?
In practice it is not revised — the correction is made in the next RA bill. Because the format is cumulative, adjusting the running total in the following bill produces the right outcome without reopening a certification that has already been paid against.