A retention money release letter is a contractor's or supplier's formal request to the employer or main contractor to release the amount retained from running bills, once the condition in the contract (completion, handover or expiry of the defect liability period) is met. It should cite the contract clause, list the retention deducted bill by bill, confirm the condition is satisfied, and ask for payment by a specific date.
The letter format
[CONTRACTOR LETTERHEAD] [CONTRACTOR NAME] | [ADDRESS] | GSTIN: [GSTIN] | [UDYAM NO., IF ANY] Ref: [YOUR REF. NO.] Date: [DATE] To, [EMPLOYER / MAIN CONTRACTOR NAME] [ADDRESS] Kind attention: [PROJECT MANAGER / ACCOUNTS HEAD] Subject: Release of retention money under [CONTRACT / WORK ORDER NO.] dated [DATE] for [PROJECT NAME] Dear Sir/Madam, 1. We executed [DESCRIPTION OF WORK] under the above [contract / work order]. Under clause [CLAUSE NO.], [RETENTION %]% was retained from each running account bill as retention money. 2. Retention deducted: RA bill no. | Bill date | Bill value (Rs) | Retention (Rs) [RA BILL NO.] | [DATE] | [AMOUNT] | [AMOUNT] [RA BILL NO.] | [DATE] | [AMOUNT] | [AMOUNT] Final bill [NO.] | [DATE] | [AMOUNT] | [AMOUNT] Total retention held: Rs [TOTAL RETENTION] Less retention already released on [DATE]: Rs [AMOUNT] Balance retention due: Rs [BALANCE] 3. The work was completed and handed over on [DATE], as recorded in [completion certificate / handover note / taking-over certificate] dated [DATE]. The defect liability period of [MONTHS] months under clause [CLAUSE NO.] expired on [DATE]. [No defects were notified to us during this period. / All defects notified on [DATE] were rectified on [DATE], as confirmed by [NAME] on [DATE].] 4. The conditions for release under clause [CLAUSE NO.] are therefore satisfied. We request you to release the balance retention of Rs [BALANCE] by [DATE: 15 DAYS FROM TODAY] to A/c [ACCOUNT NAME], [ACCOUNT NO.], IFSC [IFSC]. 5. [Optional: If release requires any formality, such as a no-claim certificate or indemnity bond, please let us know by [DATE]. / We are willing to furnish a bank guarantee of equal value in lieu of cash retention if required.] 6. If the retention is not released by the above date, we reserve the right to claim interest [under clause [NO.] / under Section 16 of the MSMED Act, 2006] and to pursue remedies available under the contract and in law. Yours faithfully, For [CONTRACTOR NAME] [SIGNATURE] [NAME], [DESIGNATION] Enclosures: contract / work order extract (retention and DLP clauses); RA bill summary; completion certificate; defect rectification records
How to fill it
- Read the retention and defect liability clauses and quote them by number. Release conditions vary: some contracts release half on completion and half after the DLP.
- Build the table from your RA bills and the employer's payment advices, which show the retention deducted.
- Attach the completion or handover certificate. If the employer never issued one, attach the handover email or occupancy evidence and say so.
- Record every defect notified during the defect liability period and when it was fixed.
- Send it to both the project team and accounts, and to the employer's registered address for larger amounts.
Common mistakes
- Waiting years after the DLP to ask. Limitation usually runs from when retention became payable; delays can cost you the claim.
- Signing a "no claim" certificate for the final bill that also waives retention. Read any such document before signing.
- Not separating retention from disputed final-bill items, which lets the employer hold everything.
- Accepting oral assurances from site staff. Keep every exchange in writing.
What happens next
If the employer releases it, issue a receipt and close the retention ledger. If it raises defects for the first time after the DLP, reply in writing with your records. If it simply does not pay, follow up with the final demand letter and then a legal notice. Many works contracts contain an arbitration clause, which decides the forum.
FundRaksha advocates handle retention claims for contractors and suppliers; see retention money recovery and builder not releasing retention. The fee is 30% of what is recovered.
Last reviewed: 2026-10-20. Information for Indian businesses; not legal advice.