GST glossary
Proforma invoice
A proforma invoice is a preliminary bill sent before the sale is final, showing the goods or services, the price and the GST the customer will be charged. It is an offer or a request for advance payment, not a tax invoice, so it creates no GST liability and no input tax credit.
Why it matters to your business
A proforma invoice lets your customer see exactly what they will pay before you commit stock or start work, and gives them a document to release an advance against. Because it is not a tax invoice, sending one does not start your GST liability or use up an invoice number.
How it works
As of October 2026:
- A proforma invoice looks like the final bill: your details and GSTIN, the customer’s, the items with HSN codes, quantity, rate, GST and the total, with payment terms and validity.
- It should be clearly headed “Proforma invoice” and numbered in its own series.
- It is not reported in GSTR-1 and is never registered as an e-invoice.
- When the goods are dispatched or the service is provided, you issue the tax invoice. The amounts may differ from the proforma if quantities or prices have changed.
- An advance received for goods carries no GST until the invoice. An advance for services does.
An example
A Rajkot machine-tool maker agrees to supply a lathe for ₹4,00,000 plus 18% GST. It sends a proforma invoice for ₹4,72,000 asking for a 30% advance. The customer pays ₹1,41,600. On dispatch six weeks later, the maker issues the tax invoice for ₹4,72,000, sets the advance against it and collects the balance.
Common mistakes
- Numbering proforma invoices in the tax invoice series, which leaves gaps in it.
- Reporting a proforma invoice in GSTR-1.
- A customer claiming credit on a proforma invoice.
- Forgetting to issue the tax invoice once the goods have gone.
Questions about Proforma invoice
Is a proforma invoice valid under GST?
It is a valid commercial document, but GST law does not treat it as an invoice. You do not report it in GSTR-1, and your customer cannot claim input tax credit on it.
What is the difference between a quotation and a proforma invoice?
A quotation offers a price for the customer to consider. A proforma invoice is sent once the customer has agreed, in the form of the final bill, usually to collect an advance or to arrange a letter of credit or import paperwork.
Do I pay GST when I receive an advance against a proforma invoice?
For goods, no. GST on goods is due when the tax invoice is issued. For services, GST is due on the advance, and you issue a receipt voucher for it.
Should a proforma invoice have a number?
Yes, from a series of its own, kept separate from your tax invoice numbers.
Updated .