What Is a Proforma Invoice?
A buyer wants paperwork before releasing money, and the seller has nothing to bill yet.
A proforma invoice is a document a seller sends before a supply, setting out the goods, quantities, rates and total exactly as the final bill will read, so the buyer can approve the spend or release an advance. Under India’s GST law it is not a tax invoice, which means it creates no tax liability for the seller and no input tax credit for the buyer.
What a Proforma Includes
There is no prescribed format, because GST law does not recognise the document at all. What it carries is whatever the buyer needs in order to act on it.
| Field | Why it is there |
|---|---|
| Header | The word Proforma, so nobody files it as a bill |
| Items | Description, quantity and rate on each line |
| Taxes | The GST that will apply, shown for information |
| Total | The amount the buyer should expect to pay |
| Validity | How long the quoted rates hold |
| Terms | Advance, delivery window and payment mode |
The header matters more than it sounds. Mark it plainly and an accounts team files it for approval; leave it looking like a tax invoice and somebody eventually books it as one. Firms that have moved the whole chain into software are digitising invoice handling so the same lines carry from one document into the next.
Proforma Invoice vs Tax Invoice
They can carry identical numbers. Only one of them counts.
| Aspect | Proforma invoice | Tax invoice |
|---|---|---|
| Issued | Before the supply | When the supply happens |
| Serial | Not a GST serial | Consecutive, unique per year |
| GST | Shown for information | Charged and payable |
| ITC | Cannot be claimed | Claimable by the buyer |
| Purpose | Approval and advance | Legal record of the sale |
A quotation sits one step further back, still open to negotiation. The proforma comes after both sides agree, and the quotation to invoice step is what finally produces the document your buyer can file against.
Proforma Invoice Example
A kitchen-equipment dealer in Nellore agrees to supply three commercial refrigerators in April 2026. The buyer needs something on paper to release an advance, so the dealer sends a proforma.
| Line | Detail |
|---|---|
| Item | Commercial refrigerator, 450 L |
| Quantity | 3 units |
| Rate | Rs.62,400 each |
| Taxable value | Rs.1,87,200 |
| GST shown | Rs.33,696 |
| Total | Rs.2,20,896 |
Note: this is an invented example for illustration only. The dealer, the figures and the rate applied are made up, and GST rates differ by product and change over time, so work out your own with the GST invoice value calculator.
Nothing has entered anyone’s books at this point. The dealer reports no tax on this document, the buyer claims nothing against it, and both wait for the refrigerators to move before a tax invoice exists.
Where the Proforma Stands Under GST
GST law lists the documents a registered business may issue, and the proforma is not among them. That single fact explains everything the document can and cannot do.
- it creates no output tax liability for the seller
- it supports no input tax credit for the buyer
- it carries no GST serial, so it never enters your returns
- if an advance is paid against it, the seller issues a receipt voucher rather than a tax invoice
- if the supply then falls through, a refund voucher closes off that advance
The advance rule splits by what you sell. On goods, Notification 66/2017 removed GST on advances for regular taxpayers, so the tax waits for the invoice. On services the tax falls due the moment the money lands, whether or not any work has started.
Section 31 of the CGST Act sets out that list of documents. Running a period past a GST return filing checklist is a quick way to confirm no proforma has crept into your outward supplies.
Raise Both on the Best Retail Billing Software
A proforma and the tax invoice that follows it should come off one system. The best retail billing software makes that a click rather than a retype.
For retail businesses, Petpooja Invoice covers GST invoicing with automatic tax calculation, real-time GST tracking across tax payable, input tax credit and cash ledger balance, centralised inventory with barcode scanning, multi-counter billing, and e-invoice and e-way bill generation. For restaurants, Petpooja POSS is the counterpart.
Across the counters we work with at Petpooja, the proforma that causes trouble is the one nobody marked plainly, which an accounts team then books as a purchase. If your quotes, proformas and invoices still sit in three separate files, this comparison of Petpooja Invoice against manual billing shows what the joined-up version looks like.
Frequently Asked Questions
Not in the way a signed contract is. It records what the seller intends to charge and holds those terms in good faith, but neither side is committed until the order is placed and the supply happens.
No. Credit follows the tax invoice, never the proforma, however clearly the GST is printed on it. Claiming against a proforma is the mistake that shows up later as a mismatch in your returns.
That depends on what you supply. For goods, Notification 66/2017 means a regular taxpayer owes no GST on the advance and the tax waits for the invoice; for services, tax is payable as soon as the money is received.
It should not have one. Rule 46 requires invoice serials to be consecutive and unique for the financial year, so spending one on a document that may never become a sale leaves a gap your accountant has to explain.
