Capital Work-in-Progress — From Project Spend to Fixed Asset
Collect every rupee of capex against the project and its work orders, keep it out of profit and off the fixed-asset register until the work is done, then capitalise it into fixed assets in one approved step — with the Schedule III CWIP disclosures built from the same figures.
The Challenge
While a project is under construction, its cost lives in spreadsheets — no single collector, no running balance, and no line from what was spent to the asset it eventually becomes. When the auditor asks what makes up the capital-work figure, the answer is a reconciliation exercise.
Assets get capitalised late, or in the wrong amount. Interest, freight, customs duty, labour and overhead that belong in the asset are left out, so the asset is under-stated — and once depreciation starts on the wrong base, it stays wrong for the asset's whole life.
For the statutory disclosure side — the ageing schedule, the completion schedule and capital commitments as exports — see CWIP and Schedule III.
Schedule III of the Companies Act 2013 requires a CWIP ageing note and, since the 2021 amendment, a completion schedule for overdue projects. Rebuilt by hand at year-end, it rarely ties back to the ledger. See the fixed asset register the finished assets land in.
How We Address This
Cost Collects Against the Project
Every capital project holds its own cost against its work orders. The work order is where the money gathers; the project rolls its work orders up. For a simple project a single work order is created for you, so the structure stays out of the way. One running balance is the source of truth at both levels — you always know what the project has cost so far.
Every Cost Routes to the Work Order — Nothing Straight to a Ledger
Tag a purchase order, goods receipt or service-acceptance line to a live work order and its cost is booked to capital work-in-progress instead of being expensed or capitalised early — and the freight and customs duty that ride the same purchase follow the tag. Borrowing cost, labour and overhead that belong in the asset are added directly. Nothing is keyed straight into the capital-work ledger, so your books and the register never drift apart.
One Approved Step to Capitalise
When the work is done, one capitalisation step turns the accumulated cost into fixed-asset records — the whole project or part of it, a brand-new asset or added onto an existing one. The cost is distributed to the paisa; each asset receives a unique asset ID, the correct GST registration, its full landed cost, and depreciation running from day one — handed straight to your fixed asset register.
GOVERNANCE-GRADEEvery Money Move Needs Approval — No Self-Approval
Capitalising, finalising, writing down abandoned scope, reversing an earlier write-down, moving cost between work orders, and activating, suspending or cancelling a project all route through your existing approval matrix. And — separately from scope — an amount-level write-down of a work order to its recoverable value: you supply the recoverable value, its basis, and supporting evidence; the system computes and books the loss, with reversals capped at cost in a separate pool. The software never computes value-in-use or fair value — that assessment stays with you and your CA. The person who initiates a step can never approve it, and two steps cannot run on the same work order at once. A suspended or cancelled project stops taking new cost — it cannot be booked to by mistake.
The Schedule III Notes, From the Same Figures
The disclosures come straight off the cost lines that back the ledger: the capital work-in-progress ageing note with its overdue and cost-overrun flags, the completion schedule for overdue projects measured against the budget and date frozen when the project was started, and capital commitments on open orders — including the GST you cannot reclaim. Where a figure cannot be assessed, the report says so rather than guessing.
A Tally Journal for Every CWIP Event
Every cost booking and every lifecycle step posts its own journal voucher to your Tally sync queue, tagged to the work order's cost centre; a reversal re-posts the mirror entry. The capital-work balance in your books and in Tally stay in step — no month-end re-keying, and no divergence to reconcile at audit.
See Cost Become a Capitalised Asset
Cost collected against a project's work orders, held out of the books as capital work-in-progress, then turned into a fixed asset in one approved capitalisation step.
More short videos on the demo page.
What the finished asset carries
An asset built over a project is rarely one invoice. It is the equipment, the freight and customs duty that landed it, the installation labour, the overhead and the borrowing cost that belong in its capitalised value. Because each of those was booked against the project's work order as it happened, the capitalisation step already knows the full picture — it distributes the accumulated cost to the paisa across one or more assets, stamps each with a unique asset ID and the right GST registration, and carries the landed cost across so depreciation starts on the correct base.
From there the asset lives in your fixed asset register like any other — depreciated under Schedule II, tagged and verified, traceable back through the project to the purchase orders and goods receipts that built it. The landed-cost rules that decide what capitalises and what expenses are the same ones that run across the rest of procurement.
Where the project is immovable property
Construction of immovable property is where GST input tax credit is restricted under Section 17(5)(c) and (d) of the CGST Act. Mark a project's nature — immovable property, or plant and machinery, with a per-work-order override — and the input-tax-credit treatment on its tagged purchase lines is defaulted accordingly, with a note the approver acknowledges on record.
It is a default and a prompt, not an automatic block and not a return filed on your behalf — the decision stays with your team, but it is captured against the project rather than left to memory. And where the credit genuinely cannot be reclaimed, that non-recoverable GST is carried into the capital-commitments figure, because it is part of what the project will cost. For the per-line mechanics across the rest of procurement, see per-line GST ITC.
Enabled Per Organisation, During Onboarding
Capital work-in-progress is switched on for each organisation during onboarding, once the capital-work ledgers are mapped to your Tally. Until then, nothing about your existing procurement or asset flow changes. It composes with per-line GST ITC and import accounting without any special configuration — the project simply becomes a place cost can gather before it becomes an asset.
Compliance Mapping
Companies Act 2013
Schedule III
CWIP ageing note and, since the 2021 amendment, a completion schedule for overdue projects. Both are built from the same cost lines that back the ledger, so they reconcile to the accounts rather than being rebuilt by hand.
CGST Act 2017
Section 17(5)(c) & (d)
Input-tax-credit restriction on the construction of immovable property. Defaulted per project nature and flagged for the approver's recorded acknowledgment — a prompt, not an automatic block. Non-recoverable GST flows into capital commitments.
AS 16 / Ind AS 23
Borrowing Costs
Borrowing cost directly attributable to a project is capitalised against its work order, with the specific loan named on each entry — so the interest that belongs in the asset is captured, not left out.
AS 10 / Ind AS 16
Property, Plant & Equipment
On capitalisation the accumulated cost becomes a fixed-asset record with its full landed cost, a unique asset ID and depreciation from day one — handed to the register that stands behind the Schedule II disclosure.
Further Reading
Fixed Asset Register & DepreciationWhere a capitalised project lands — depreciation, year-end snapshots, and the fixed asset schedule for the financial statements.
Landed Cost CapitalisationHow freight, duty and other landed-cost heads are decided and carried into an asset's capitalised value.
Tally IntegrationHow CWIP cost bookings and ceremonies reach Tally as journal vouchers, tagged to the work order's cost centre.
Assess How This Applies to Your Organisation
Share a brief on your capital projects — how cost is collected today, what gets capitalised and when, and how the Schedule III CWIP note is built at year-end — and we will evaluate how project-to-asset capitalisation fits your books.