A proforma invoice is a preliminary quote or estimate sent before a sale is final; it is not legally binding, does not trigger GST and cannot be used to claim input tax credit. A tax invoice is the official GST document that records the sale, makes the tax payable and lets a registered buyer claim input tax credit.
So if you are holding a proforma, treat it as an offer: you can approve it and even pay against it, but you cannot book it as a purchase or claim credit on it until the tax invoice arrives.
Proforma invoice vs tax invoice: key differences
The difference comes down to legal effect: a proforma proposes a sale and changes nothing in your books or GST returns, while a tax invoice records the sale, fixes the GST due and decides whether the buyer gets input tax credit. Everything else in the table follows from that.
| Feature | Proforma invoice | Tax invoice |
|---|---|---|
| Purpose | Estimate, quote or advance request | Record of the sale for GST and accounts |
| When issued | Before the sale is agreed or supplied | Goods: before or at removal or delivery. Services: within 30 days of supply |
| Legally binding | No | Yes |
| Triggers tax / GST | No | Yes; the tax becomes payable |
| Recorded in accounts | No | Yes, as receivable for the seller and payable for the buyer |
| Allows ITC claim | No | Yes, once the seller reports it in GSTR-1 |
| Edits and changes | Revised freely | Corrected only by a credit or debit note |
| Defined in GST law | No | Yes, section 31 and Rule 46 |
What do a proforma invoice and a tax invoice look like for the same order?
Here is one order from a Chennai furniture maker to a Bengaluru office, first as the proforma sent to win the order, then as the tax invoice raised when the goods leave the workshop.
| Line | Proforma invoice | Tax invoice |
|---|---|---|
| Heading | Proforma invoice: not a tax invoice | Tax invoice |
| Number and date | PI-0412, 2 June 2026 | TI/26-27/0187, 20 June 2026 |
| Seller | Name and address; GSTIN shown for reference | Name, address and GSTIN (mandatory) |
| Buyer | Company name and address | Name, address, GSTIN and place of supply: Karnataka (29) |
| Items | 20 workstations at ₹15,000 | 20 workstations at ₹15,000, HSN 9403 |
| Value | ₹3,00,000 | Taxable value ₹3,00,000 |
| Tax | GST at 18% expected: ₹54,000 | IGST at 18%: ₹54,000 (inter-state) |
| Total | ₹3,54,000 (estimate) | ₹3,54,000, less advance received ₹1,77,000; balance due ₹1,77,000 |
| Terms | Valid 15 days; 50% advance; delivery in 3 weeks | Reverse charge: No |
| Other | Bank details for the advance | Reference: PI-0412; signature; QR code with IRN if e-invoicing applies |
The proforma can show the GST that will apply so the buyer knows the total, but it does not charge it. The tax invoice carries the particulars Rule 46 requires, in a separate consecutive series of up to 16 characters, and goods invoices are made in three copies (Rule 48).
If you are the seller: which do you send, and when?
Send a proforma when the buyer needs a firm quote or you want an advance, and send the tax invoice at the point GST law fixes: before or at removal or delivery for goods, within 30 days for services.
- Quote stage: send the proforma with prices, terms and validity. No GST entry, nothing in GSTR-1.
- Advance received: issue a receipt voucher (section 31(3)(d), Rule 50). For services, GST on the advance is payable that month and reported in Table 11A of GSTR-1; for goods, no GST is due on the advance (Notification 66/2017-Central Tax).
- Supply: raise a fresh tax invoice in your tax invoice series, referring to the proforma number, and deduct the advance already covered. For services, GST already paid on the advance is adjusted (Table 11B).
- Order cancelled after an advance: issue a refund voucher (section 31(3)(e)).
- Price changes after the tax invoice: issue a credit or debit note; a credit note that reduces tax must go out by 30 November after the financial year.
For a services firm the numbers look like this: a ₹1,18,000 advance on a ₹2,36,000 project includes ₹18,000 GST, paid in the month received; the final invoice shows ₹2,00,000 plus ₹36,000 GST, and only the remaining ₹18,000 is paid then.
If your client is abroad, the same steps apply. Under a Letter of Undertaking no GST is paid on the advance or the export, and the tax invoice must carry the line 'Supply meant for export under bond or Letter of Undertaking without payment of integrated tax' and the rupee value at the exchange rate on the date of supply. Providers such as Xflow give overseas clients local account details and issue an eFIRA for every international transaction, which serves as proof of each export receipt.
Simplify and automate your invoice and receipt workflows
If you are the buyer: what can you do with a proforma invoice?
Is a proforma invoice a tax invoice? No. You can approve it, pay an advance against it and use it to arrange funds, but you cannot record it as a purchase or claim input tax credit on it.
| You want to | With a proforma | Why |
|---|---|---|
| Pay an advance | Yes; ask for a receipt voucher | The seller must issue one for any advance |
| Get internal approval, a loan or a letter of credit | Yes | It sets out the agreed price and terms |
| Book the purchase or expense | No | No supply has been recorded yet |
| Claim input tax credit | No | Section 16(2)(a) needs a tax invoice or debit note, reported by the seller and visible in GSTR-2B |
| Clear imported goods through customs | No | Customs works on the commercial invoice; a proforma may only support a provisional assessment |
| Hold the seller to the price | Only if you accept it within its terms and the seller confirms the order | A proforma is an offer, not a contract on its own |
How is a proforma different from an invoice, a bill of supply and a commercial invoice?
The difference between an invoice and a proforma is timing: an 'invoice' in everyday use asks for payment for a supply that has happened, while a proforma describes one that has not; under GST, a registered seller's invoice for a taxable sale must be a tax invoice.
- Bill of supply: issued instead of a tax invoice by composition dealers or for exempt supplies, with no tax charged (section 31(3)(c)).
- Commercial invoice: the final invoice used by customs when goods are exported or imported; services exporters do not need one.
- Quotation: a price offer, usually less formal than a proforma; see proforma invoice vs quotation.
- Unregistered business: issues a plain invoice without GST; only registered persons issue tax invoices.
Frequently asked questions
No. It is an offer; a binding sale exists once the order is confirmed, and the tax invoice records it.
No. Only tax invoices, credit notes and debit notes are e-invoiced or reported. E-invoicing applies above ₹5 crore turnover, and businesses at ₹10 crore or more must report within 30 days.
Yes, for an overseas client, but the tax invoice must also show the rupee value for GST.
No. It is optional; many sellers go straight to the tax invoice.
Yes, until the order is confirmed; ask for a revised proforma, since it has no tax effect.
