A proforma invoice looks like an invoice but is not one. It is a preliminary document sent before a sale is final, while a GST tax invoice is the legal document issued when goods or services are actually supplied. Confusing them is a common mistake, especially for businesses that quote and take advances.
What is the difference between a proforma invoice and a tax invoice?
A proforma invoice is an estimate of what a sale will cost, sent in advance so the buyer can approve it or arrange payment. A tax invoice is issued at the time of supply, records the sale and the GST charged, and lets the buyer claim input tax credit. A proforma invoice does none of that.
| Proforma invoice | GST tax invoice | |
|---|---|---|
| Purpose | Preliminary bill or price confirmation | Legal record of a taxable supply |
| When issued | Before the supply | At the time of supply, as GST law requires |
| Creates tax liability? | No | Yes — it is the document on which GST is charged |
| Input tax credit for buyer | Not available | Available, if the buyer is eligible |
| Invoice number | Usually a separate series | Consecutive series under the GST rules |
| Governing rules | Not a GST document | Section 31, CGST Act and Rule 46 |
When should you use a proforma invoice?
- To give a buyer the final price and terms before they commit.
- To ask for an advance or for payment before dispatch.
- When a customer needs a document to arrange funds or approvals internally.
- For export or import paperwork, where it is often requested before shipment.
Mark it clearly — for example “Proforma Invoice — not a tax invoice” — so no one mistakes it for the real thing and tries to claim credit on it.
When must you issue a tax invoice?
When you supply taxable goods or services, a registered supplier must issue a tax invoice within the time limits in the GST rules, with all the particulars described in how to create a GST invoice. Moving goods on a proforma invoice is not what the GST rules provide for; goods in transit should be accompanied by the right document, such as a tax invoice, bill of supply or delivery challan.
What if the customer pays an advance?
Receiving an advance does not turn a proforma invoice into a tax invoice. Depending on what you supply, GST rules may require a receipt voucher for an advance, and the tax treatment of advances differs between goods and services. Confirm the rule for your supply with a chartered accountant, and issue the tax invoice when the supply happens.
Proforma invoice vs quotation
A quotation is an offer to supply at a price, usually valid for a period. A proforma invoice is more like a ready-to-pay bill for that offer. Neither is a tax invoice. If you only need to quote, use the free quotation maker.
Related guides: how to create a GST invoice, invoice vs bill vs receipt, delivery challan vs invoice, how to calculate GST on an invoice, GST invoice vs bill of supply.
Ready to issue the real thing? Create a GST tax invoice free — no sign-up, no watermark. Create a GST invoice
Frequently asked questions
Is a proforma invoice a tax invoice?
No. A proforma invoice is a preliminary document. A GST tax invoice is the legal document issued at the time of supply.
Can the buyer claim input tax credit on a proforma invoice?
No. Input tax credit requires a valid tax invoice showing the GST charged.
Do I need to issue a tax invoice after a proforma invoice?
Yes. When the goods or services are supplied, issue a tax invoice with all the mandatory GST particulars.
Can I make a proforma invoice for free?
Yes. You can prepare a quotation or invoice-style document free with BillsFreind; just label it clearly as a proforma if that is what it is.
Related guides
- Delivery Challan vs Invoice: What's the Difference?
- HSN Code vs SAC Code: What's the Difference?
- GST Invoice vs Bill of Supply: What's the Difference?
- How to Calculate GST on an Invoice (With Examples)
By BillsFreind Team · 2026-10-26 · 3 min read