What is a running account bill (RA bill)?
A running account bill (RA bill) is an interim bill a contractor raises for work measured so far, paid before the work is complete, net of retention, advance recoveries and tax deductions.
Also called RA bill, running bill, interim bill, on-account bill.
A building contract runs for months, so the contractor is paid in instalments as work is measured, not in one sum at the end. Each instalment is a running account bill; the last one, after completion, is the final bill.
How it works in government works. The Ministry of Finance’s Manual for Procurement of Works (Second Edition, 2025, chapter 5) sets the pattern:
- Measure. Every item with a financial value is recorded in measurement books, signed jointly by the department’s official and the contractor. Electronic measurement books are encouraged.
- Claim and certify. Each month the contractor submits a statement of what it believes it is owed. The engineer checks quantities, extra-work claims, retention and price adjustment, and issues an interim payment certificate.
- Pay, net of deductions. Payment is made on that certificate, less retention money, recovery of advances and statutory deductions. Advances are recovered by proportionate deductions from running bills.
- Pay on time. At least 75% of an eligible RA bill should be paid as an ad-hoc payment within 10 working days of submission, and the rest within 28 working days.
Paying an interim bill does not mean the work is accepted: the contractor remains liable for over-measurement and defects until the defects liability period ends. The final bill should be paid within three months after completion.
A private builder’s work order sets its own terms, but the same points need agreeing: who measures, who certifies, what is deducted and when payment is due.
Tax deducted at source. Under section 393(1), Table serial 6(i), of the Income-tax Act, 2025, a designated person paying a contractor deducts TDS of 1% if the contractor is an individual or HUF and 2% otherwise. The thresholds are ₹30,000 for a single sum and ₹1,00,000 for the aggregate.
Worked example (sample figures, GST left out). RA bill no. 4 from a contractor company:
| Item | Amount |
|---|---|
| Work measured and certified this bill | ₹12,00,000 |
| Less retention at 5% | ₹60,000 |
| Less mobilisation advance recovery | ₹1,00,000 |
| Less TDS at 2% | ₹24,000 |
| Net payable | ₹10,16,000 |
LoftRay’s construction module records work orders, measurements, RA bills, advances and retention release. TDS deducted on contractor RA bills goes into the quarterly Form 140 statement file that LoftRay prepares for the builder to validate and upload.
Sources, read on 9 Nov 2026: Manual for Procurement of Works, Second Edition 2025 (Department of Expenditure) and Income-tax Act 2025, s.393.