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Proforma Invoice Under GST (Format, Rules & Free Example)

A proforma invoice is a preliminary document sent to a buyer before the actual supply happens. It is not a tax invoice and creates no GST liability. Yet many businesses confuse proforma invoices with tax invoices — an error that can create ITC problems for the buyer and compliance risk for the seller.

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What is a Proforma Invoice?

A proforma invoice is a quotation in the format of an invoice. It shows the buyer what they will pay — including estimated taxes — before the order is confirmed or goods are shipped. It does not constitute a supply event under GST.

Proforma Invoice vs Tax Invoice Under GST

Feature Proforma Invoice Tax Invoice
Legal status Not a GST document Mandatory GST document
GST liability created? No Yes
ITC available to buyer? No Yes
Required in GSTR-1? No Yes
Triggers time of supply? No Yes
Contains GSTIN? Optional Mandatory

Important

A proforma invoice cannot be used to claim ITC. Once goods are delivered or services rendered, issue a proper tax invoice — the proforma alone is insufficient.

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When to Use a Proforma Invoice

  • Before finalising a deal — to give the buyer price clarity
  • For imports — customs authorities require a proforma to estimate duties
  • For export orders — buyer's bank may require proforma for LC (Letter of Credit)
  • Government tenders — some require proforma with your bid
  • When advance payment is requested — show breakdown before payment

What to Include in a Proforma Invoice

Though not a tax document, a professional proforma includes:

  • "PROFORMA INVOICE" clearly stated at the top (to distinguish from tax invoice)
  • Your business name, address, and GSTIN
  • Buyer name and address
  • Proforma number and date
  • Description of goods/services with HSN/SAC
  • Quantity and unit price
  • Estimated GST (CGST/SGST or IGST)
  • Validity period (e.g., "Valid for 30 days")
  • Payment terms

Converting Proforma to Tax Invoice

After the order is confirmed and supply happens, issue a tax invoice. The tax invoice number must be new — you cannot simply convert the proforma number. The proforma reference can be mentioned in the tax invoice for cross-referencing.

Example

Proforma Invoice: PRO-2026-001 (sent 1 June). Order confirmed 3 June. Goods dispatched 5 June. Tax Invoice: INV-2026-042 (issued 5 June, references PRO-2026-001).

FAQs

Is a proforma invoice legally binding?

No. A proforma invoice is not legally binding and does not obligate either party to complete the transaction. It is an offer, not a confirmed sale.

Can a buyer use a proforma invoice to claim ITC?

No. ITC can only be claimed on a valid tax invoice that appears in GSTR-2B. A proforma invoice is not reported in GSTR-1 and does not enable ITC.

Do I need to pay GST when I issue a proforma invoice?

No. GST liability arises at the time of supply (tax invoice / delivery / payment — whichever is earlier). A proforma invoice is a pre-supply document and creates no tax liability.

How long is a proforma invoice valid?

There is no GST rule on proforma validity. Businesses typically state a validity period (15–30 days) in the document itself.

Why Businesses Stop Using Excel for GST Invoices

Manual GST calculation mistakes

One wrong CGST/SGST split or a misapplied rate triggers notices and ITC denial for your buyer.

Slow invoice creation

Copying last month's Excel file, updating dates, recalculating — 20 minutes for what should take 30 seconds.

Formatting breaks on every device

Excel invoices look different on every printer and PDF converter. Clients complain about unreadable layouts.

No easy sharing or payment link

Sending PDFs over WhatsApp with no way for clients to pay directly slows down collections.

Incorrect tax type (IGST vs CGST+SGST)

Excel can't auto-detect intra vs inter-state supply. Wrong tax type = ITC rejected for your buyer.

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Disclaimer: The information in this article is for general informational purposes only and does not constitute professional tax, legal, or financial advice. GST rules and rates are subject to change. Consult a qualified CA or tax professional before making compliance decisions.

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