Deductions Register (RA Bills)

Construction RA bills (Running Account bills) are typically issued monthly based on cumulative work measured + valued. The contractor's gross claim is often 20-30% higher than the actual amount the contractor receives, because of various contractual + statutory deductions:

- Retention (5-10% of bill value) — withheld until project completion + DLP - Mobilization advance recovery — proportional recovery from each bill - Material advance recovery — for materials issued by client / on consumption basis - Liquidated Damages (LD) — for delays - TDS (Income Tax) — withheld per Income Tax Act Section 194C (1-2%) - GST adjustments — input tax credits, reverse charge - Penalties — for quality / safety violations - Other contractual — insurance premiums, equipment hire deductions

The Deductions Register tracks each deduction across each bill — total deducted, balance recoverable, when released. Without it, contractor + client disputes about 'how much has actually been retained' become endless.

Per-bill deductions (typical breakdown): - Gross bill value: ₹X - Less retention (10%): -₹X×0.10 - Less mobilization advance recovery (10% of bill until repaid): -₹X×0.10 - Less material advance recovery (if applicable): per agreement - Less LD (if delayed): per daily rate × delay days - Less TDS @ 1-2% (1% for unincorporated, 2% for incorporated): -₹X×0.01-0.02 - Less penalties (if applicable): per NCR / inspection findings

Net payable to contractor: typically 70-85% of gross bill value

Retention release: - 50% at substantial completion (typically 6-12 months after construction end; per DLP terms) - 50% at DLP expiry (typically 24 months after completion)

Mobilization advance: typically 10% of contract value; advanced upfront; recovered proportionally from each RA bill until fully recovered.

LD calculation: contract specifies daily rate (typically 0.5% of contract value per week of delay, capped at 5-10% of contract value).

1. Retention release delay — substantial completion certificate issued but retention not released; financial impact on contractor.

2. LD calculation disputes — definition of 'completion' for LD purposes; force majeure / EOT considerations.

3. Mobilization advance recovery rate — too aggressive (recovery > rate of bill submission) starves contractor's cash flow.

4. TDS mismatch — contractor's GST input claim vs client's TDS deduction; reconciliation issues at year-end.

5. No deductions register — both parties unclear about total deducted; balance to be released unknown.

6. No escalation clause invocation — material costs escalated significantly; contractor entitled to escalation per contract; client refuses; deductions register doesn't capture.

7. Defects vs LD — defects identified during DLP; cost of rectification deducted from retention; sometimes disputed.

8. GST treatment — pre-GST contracts vs GST regime; deductions on tax differentials.

Companion PMC formats: - Contract Amendment Log (PMC-BIL-LOG-004) — amendments affecting deductions - Performance BG Tracker (PMC-BIL-LOG-003) — BG tracking - Change Order Register (PMC-RSK-REG-004) — change-order impacts on bill - ESI Tracker (PMC-LAB-LOG-004) — statutory deductions cross-ref

Regulatory + contractual: - Income Tax Act 1961 — Section 194C (TDS on contractor payments) - CGST + SGST Acts 2017 — GST on construction services + materials - FIDIC General Conditions — Clauses 8 (Time), 14 (Contract Price + Payment) - NHAI / MoRTH / CPWD standard contracts — Indian government-specific deduction practices - Indian Contract Act 1872 — Section 73 (compensation for breach)