Construction, EPC & Works Contract Compliance

Subcontractor & Works Contract Billing Calculator

Compute Running Account (RA) milestone disbursements, contractual retentions, material deductions, and statutory withholdings (TDS 194C, GST TDS, BOCW Cess) with complete 360° financial reconciliation.

Industry Project Scenarios:

1. Work Executed & Invoicing

Basic measurement value and output GST billed on the contract.

Basic Work Done Value (₹)

Net measurement sheet value of work executed in this bill (excluding GST).

Works Contract GST Rate (%)

2. Contractual & Commercial Deductions

Retentions, advances, and client material supply charged back.

Retention Money / Security Deposit (%)

Standard 5% to 10% withheld for Defect Liability Period (DLP).

Mobilization Advance Recovery (%)

Pro-rata recovery of interest-free / interest-bearing mobilization loan.

Departmental Material Supply Cost (₹)

Direct debit for cement, steel, or free-issue items supplied by principal.

Site Utilities & Penalty Deductions (₹)

Electricity, water, crane hire, or safety violation debit notes.

3. Statutory Withholdings & Taxes

Mandatory deductions under Income Tax, GST, BOCW, and Labor Acts.

Subcontractor Legal Entity

TDS Deduction Base

Deduct 1% BOCW Labor Welfare CessStatutory 1% cess under Building and Other Construction Workers Act 1996.

Deduct 2% GST TDS (Section 51)Mandatory if principal is Govt / PSU and contract exceeds ₹2.5 Lakhs.

EPF / ESIC Compliance Holdback (%)

Holdback pending submission of statutory wage sheets and payment challans.

Net Disbursable Cash Flow

Net Disbursable Amount₹50,00,000.00

Basic Work Executed (Measurement): ₹50,00,000.00
Output GST (18%): + ₹9,00,000.00
Gross Invoice Value (incl GST): ₹59,00,000.00
Total Commercial Deductions: - ₹7,50,000.00
Total Statutory Deductions: - ₹1,50,000.00
Total Deductions (Commercial + Statutory): - ₹9,00,000.00

Net Cash Payout Ratio: 84.75% of Gross Invoice

360° Financial & Tax Reconciliation

Complete visibility into immediate cash, claimable tax credits, and deferred capital.

Immediate Cash Disbursed (Bank / RTGS): ₹50,00,000.00
Claimable Tax Credits (Form 26AS & GSTR-7): ₹1,00,000.00
Deferred Receivables (Retention & Holdbacks): ₹2,50,000.00
Cost & Loan Recoveries (Mob Adv, Materials, Cess): ₹5,50,000.00
GST Output Collected (Payable to Govt): - ₹9,00,000.00
Net Retained Economic Value: ₹44,50,000.00

Itemized Deductions Schedule

Comprehensive audit breakdown of all contractual holdbacks and statutory withholdings.

Deduction Item	Category	Rate / Basis	Amount (₹)
Retention Money / Security Deposit Held by principal to secure defect liability obligations (typically 12 months post-handover).	COMMERCIAL	5% of Basic Work Done	₹2,50,000.00
Mobilization Advance Recovery Amortization of upfront interest-bearing or interest-free mobilization advance received.	COMMERCIAL	10% of Basic Work Done	₹5,00,000.00
BOCW Labor Welfare Cess Mandatory statutory cess under BOCW Welfare Cess Act, 1996 remitted to State Labor Welfare Board.	STATUTORY	1% of Construction Cost	₹50,000.00
Income Tax TDS (Section 194C) Withheld under Section 194C of IT Act; credited to subcontractor's PAN and viewable in Form 26AS/AIS.	STATUTORY	2% on Basic Work Done	₹1,00,000.00
Total Withholdings & Deductions:			₹9,00,000.00

How it works

Works Contract Billing & Statutory Withholding Framework in India: 1. Gross Works Contract Value: • Basic Work Executed = Measured quantities × agreed BOQ rates. • Output GST = Basic Work Executed × GST Rate (18% standard under SAC 9954; 12% concessional for affordable infrastructure). • Gross Invoice Value = Basic Work Executed + Output GST. 2. Contractual & Commercial Deductions: • Retention Money (Security Deposit) = Typically 5% to 10% of basic work executed, retained to cover Defect Liability Period (DLP). • Mobilization Advance Recovery = Pro-rata amortization of upfront advance disbursed by the principal. • Departmental Material Supply = Value of client-supplied cement, structural steel, or free-issue items recovered from the bill. • Site Utilities & Penalties = Electricity, water, equipment hire, and safety deductions. 3. Statutory Deductions & Tax Withholdings: • BOCW Labor Welfare Cess = 1% on cost of construction under Building and Other Construction Workers' Welfare Cess Act, 1996. • Income Tax TDS (Section 194C) = 1% for Individuals/HUFs, 2% for Companies/LLPs/Partnership Firms. Per CBDT Circular 23/2017, TDS is deducted strictly on the basic contract value excluding GST. • GST TDS (Section 51) = 2% (1% CGST + 1% SGST or 2% IGST) mandatory for contracts with Central/State Govt, PSUs, or local bodies exceeding ₹2,50,000. • EPF / ESIC Compliance Holdback = Provisional retention pending submission of verified wage sheets and statutory payment challans. 4. Net Disbursement & Financial Realization: • Net Cheque / RTGS Payment = Gross Invoice Value - Total Commercial Deductions - Total Statutory Deductions. • Total Retained Economic Value = Immediate Cash + Claimable Tax Credits (Form 26AS TDS + GSTR-7 GST TDS) + Deferred Receivables (Retention Money + Labor Holdback) - GST Liability Payable to Department.

Example

Example: An EPC contractor submits an RA bill for ₹50,00,000 basic work done with 18% GST (₹9,00,000), total invoice ₹59,00,000. Commercial deductions: 5% retention (₹2,50,000) and 10% mobilization recovery (₹5,00,000). Statutory deductions: 1% BOCW cess (₹50,000) and 2% IT TDS u/s 194C (₹1,00,000). Total deductions equal ₹9,00,000. The net cash disbursed to the contractor is ₹50,00,000 (84.75% of invoice), with ₹1,00,000 claimable as tax credit in Form 26AS and ₹2,50,000 deferred receivable upon project handover.

Frequently asked questions

Is TDS under Section 194C deducted on the gross invoice amount including GST or on the basic work done?

Under CBDT Circular No. 23/2017, wherever the GST component on services is indicated separately in the invoice, tax deduction at source (TDS) under Section 194C must be deducted strictly on the basic value of work executed, excluding the GST component. Deducting TDS on the GST portion is contrary to statutory CBDT guidelines.

What is BOCW Labor Welfare Cess and how is it calculated?

Under Section 3 of the Building and Other Construction Workers' Welfare Cess Act, 1996, a cess of 1% is levied on the cost of construction incurred by an employer. It is computed on the basic contract value of civil work executed before GST, and must be deposited by the principal employer with the State BOCW Welfare Board.

When is GST TDS under Section 51 applicable on works contracts?

GST TDS u/s 51 is mandatory when the recipient of goods/services is a Central or State Government department, local authority, or Public Sector Undertaking (PSU), and the total contract value exceeds ₹2,50,000 (excluding taxes). The rate of deduction is 2% (1% CGST + 1% SGST for intra-state, or 2% IGST for inter-state supply).

How should a subcontractor account for Retention Money?

Retention Money (typically 5% to 10%) represents earned contract revenue that is withheld by the principal employer to safeguard against defects during the Defect Liability Period (DLP). In the subcontractor's balance sheet, it is recorded under Current Assets as 'Retention Money Receivable' and is recoverable upon final completion certificate or submission of a Retention Bank Guarantee.

What is the IT TDS rate difference between Individual and Corporate subcontractors?

Under Section 194C(1), payments to contractors who are Individuals or Hindu Undivided Families (HUFs) attract TDS at 1%. Payments to any other legal entity (Private Limited Company, Public Limited, LLP, Partnership Firm, Association of Persons) attract TDS at 2%.

When can a transport subcontractor claim 0% TDS under Section 194C(6)?

Under Section 194C(6), no TDS is deductible on freight or carriage payments made to a contractor engaged in the business of plying, hiring, or leasing goods carriages, provided the contractor owns 10 or fewer goods carriages at any time during the financial year and furnishes a valid Permanent Account Number (PAN) along with a self-declaration.