Definition
The gross amount is the total of an invoice or line before deductions are taken off. Depending on context, it can mean the amount including tax but before discounts, retention, or withholding, or simply the full charge before anything is subtracted. Always state what the gross figure includes so the client can follow the math.
Also called: Gross total, Gross price
Gross amount in practice
The word "gross" changes meaning by context. In sales tax and VAT, the gross amount usually includes tax, and the net amount excludes it. In contractor billing, the gross amount is the full value of work done, and the net amount is what is left after retention or withholding is deducted.
Clear invoices label each figure, for example "Gross amount (incl. VAT)", "Less retention 5%", and "Net amount due". This avoids the common dispute where the client and supplier are each looking at a different total.
Example
A subcontractor bills $20,000 of work for the month. The client withholds 5 percent retention ($1,000), so the gross amount is $20,000 and the net amount due is $19,000.
Frequently Asked Questions
Is the gross amount the same as the total due?
Not always. The total due is what the client must pay now. If retention, withholding tax, or deposits are deducted, the total due is lower than the gross amount.
Does gross amount include tax?
In VAT and GST contexts it usually does. In other contexts it may not. Label the invoice clearly, for example "gross (incl. tax)", to avoid confusion.
Related terms
- Net amount The net amount is the value left after deductions, or the price before tax, depending on context.
- Subtotal The subtotal is the sum of all line item totals on an invoice before taxes, discounts, and other adjustments are applied.
- Total due The total due is the final amount the client must pay on an invoice after all line items, discounts, taxes, and prior payments are accounted for.
- Retention Retention, or retainage, is a percentage of each progress payment, commonly 5 to 10 percent, that a client withholds until a project is fully complete and accepted.
- Withholding tax Withholding tax is an amount a client deducts from an invoice payment and pays directly to the tax authority on the supplier's behalf.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.