S U and Company

India market entry · Project office accounting and audit

Accounting, Reporting and Audit for Project Offices in India

Prepared by S U and Company's CA-led advisory team · Published 27 October 2026 · About S U and Company

A project office accounts for exactly one contract, which changes what the books actually need to track. Revenue, cost, work in progress, retention money and milestone billing all have to line up against the project's own value — and when the project ends, a single set of completion accounts has to tie all of it together before the surplus can be remitted.

Quick answer

What accounting does a project office need to keep in India?

A project office must keep project-wise books of account, record transactions with the foreign company through a head office account, track work in progress and retention money against the contract, prepare audited accounts for its filings, and produce completion accounts when the project ends.

1. A project-wise chart of accounts

Because a project office accounts for one contract rather than a general trading position, its books are built around contract revenue, project costs, work in progress, retention money and milestone billing measured against the overall project value — not a generic profit-and-loss structure borrowed from a standalone company's accounts.

2. Revenue recognition

Revenue on longer contracts is generally recognised as work is performed — commonly by the percentage of completion — following the contract terms and the applicable accounting standard, with the tax treatment of that revenue checked separately rather than assumed to match the accounting treatment automatically.

3. The monthly cycle

  • Monthly project accounting. Contract revenue, subcontractor costs, expenses and payroll recorded project-wise.
  • Bank reconciliation. Every bank account matched to the books, including remittances from the foreign company.
  • Head office account. Funds received and charges from the foreign company recorded and reconciled on their own line.
  • Work in progress and retention. Milestones, retention money, advances and bank guarantees tracked against each contract stage, with release dates and conditions flagged.
  • TDS and GST workings. Tax to be deducted and net GST liability calculated with due dates flagged.
  • Reporting. A monthly pack in the head office's own group format — US GAAP, IFRS, or another standard — including foreign exchange differences.

4. Retention, advances and bank guarantees

Retention money held by the client, advances received from the client, and bank guarantees given to secure performance are all tracked separately from ordinary revenue and cost, against each contract milestone, with their specific release dates and conditions flagged — these are easy to lose track of inside a general ledger if they are not given their own line items from the start.

5. Audit and completion accounts

A project office needs audited accounts for its authorised dealer bank and ROC filings, a Chartered Accountant's Annual Activity Certificate, and a tax audit where turnover exceeds the applicable limit — in practice making an audit effectively mandatory once those filings are accounted for. When the project ends, a separate set of completion accounts is prepared up to the completion date, together with a Chartered Accountant's certificate showing the surplus and confirming that liabilities are paid or provided for. These completion accounts are what the authorised dealer bank actually asks for before the surplus can be remitted — see our FEMA and RBI compliance guide.

Frequently asked questions

Why does project accounting differ from normal accounting?

A project office accounts for one contract, so its books track contract revenue, costs, work in progress, retention money and milestone billing against the project value, rather than a general trading position.

How is revenue recognised for a project office?

Revenue on longer contracts is generally recognised as work is performed — commonly by the percentage of completion — as the contract terms and the applicable accounting standard require, with the tax treatment checked separately from the accounting treatment.

How are retention money, advances and bank guarantees accounted for?

Retention money held by the client, advances received, and bank guarantees given are tracked separately from revenue and cost, against each contract milestone, with their release dates and conditions flagged rather than left implicit in the general ledger.

What accounts are needed when the project is completed?

Final accounts up to the completion date, a Chartered Accountant’s certificate showing the surplus, and proof that liabilities are paid or provided for — these feed directly into the surplus-remittance paperwork filed with the authorised dealer bank.

Is an audit mandatory for a project office?

In practice, yes. A project office needs audited accounts for its authorised dealer bank and ROC filings, a Chartered Accountant’s Annual Activity Certificate, and a tax audit where turnover exceeds the applicable limit.

Can I get monthly reports in US GAAP, IFRS or my own group format?

Yes. The Indian project books can be converted into the group’s chart of accounts and reporting format, including foreign exchange differences, delivered on the group’s own closing calendar.

How S U and Company can help

We run project-wise bookkeeping, track work in progress and retention, and prepare completion accounts for Indian project offices. See our tax, GST and transfer pricing guide and ROC compliance guide, or explore the US-to-India entry guides.

Sources and further reading