What retention money is, and why it drains cash
Retention money is a percentage — typically 5% to 10% — that the employer withholds from every RA bill as security that the contractor will perform and rectify defects. It is not lost, but it is locked: usually half is released at practical completion and the rest only after the defect liability period (DLP), which can run one to four years. On a multi-crore, multi-year project, the total retained can equal a contractor's entire margin, sitting unavailable while wages, materials and EMIs still have to be paid. That is why tracking retention precisely — bill by bill, work order by work order — is not paperwork; it is working-capital survival.
The risk of doing it in Excel: retention is deducted on every bill but released years later, so amounts are easily lost across spreadsheets, staff changes and project handovers — money the contractor is contractually owed but never claims back.
The five steps to track retention correctly
Set the rate per contract
Record the retention % and the release terms (e.g. 50% at completion, 50% after DLP) on the work order.
Deduct on every RA bill
Apply the % to the gross bill value automatically, alongside advance recovery, TDS and GST.
Keep a running ledger
Accumulate retained amounts per work order so the total held is always visible.
Track the DLP clock
Record practical-completion and DLP-end dates so release becomes a scheduled event, not a memory.
Claim the release
Raise the retention-release claim on the due date and reconcile it against the ledger.
A worked example
Say your RA bill certifies ₹20,00,000 of work this cycle, with 5% retention, 10% advance recovery and 2% TDS under Section 194C.
| Line | Amount |
|---|---|
| Gross work this bill | ₹20,00,000 |
| Less: Retention @ 5% | − ₹1,00,000 |
| Less: Advance recovery @ 10% | − ₹2,00,000 |
| Less: TDS @ 2% (194C) | − ₹40,000 |
| Net payable this bill | ₹16,60,000 |
| Retention held to date (cumulative) | ₹1,00,000 → grows each bill |
Illustrative. The ₹1,00,000 retained this cycle joins the cumulative retention ledger for release after the DLP.
How True Site Sync automates it
Auto-deduct
Retention %, advance recovery, TDS and GST are applied on every RA bill from the work-order settings.
Retention ledger
A live cumulative total of retention held per work order and per project.
DLP tracking
Completion and DLP-end dates so release claims are never missed.
Audit trail
Every deduction ties back to the RA bill that created it — clean reconciliation at closeout.
Frequently asked questions
How do you track retention money in running account bills?
Deduct the agreed % (usually 5–10%) on every RA bill, keep a cumulative ledger per work order, and track release against the DLP. True Site Sync does this automatically.
What is retention money?
A 5–10% withholding from each payment as performance security, released partly at completion and the rest after the defect liability period.
When is it released?
Typically half at practical completion and half after the DLP ends, per the contract.
How is retention different from TDS and GST?
Retention is a contractual withholding returned later; TDS is income tax; GST is an indirect tax. One RA bill can apply all three.
Never lose retained money again
Start free — deduct retention automatically and track every release date.
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