A proforma invoice looks almost exactly like a real invoice, but it isn't one. It's a formal quotation, sent before goods or services are delivered, that doesn't create any GST liability. Sending the wrong document at the wrong stage of a sale confuses buyers and can cause real accounting problems on both sides.
When You Actually Need a Proforma Invoice, Not a Regular One
- Before a sale is confirmed, when a buyer needs a formal estimate for internal approval before committing to the order.
- Import or export shipments, where customs authorities require a proforma invoice to assess the value of goods before the actual shipment moves.
- Letter of credit applications, where a bank needs a formal document showing the transaction value before releasing funds.
- Advance payment requests, where you want to show a buyer exactly what they're paying for before you've delivered anything.
How to Create One With Our Free Tool
- Enter your company details, name, GSTIN (optional, since GST doesn't apply to a proforma), address, and contact information.
- Fill in the proforma number, date, and validity period, typically 30 to 60 days, since prices and availability can change.
- Add the buyer's details and every line item, description, quantity, unit, rate, and the GST rate that will eventually apply once the real invoice is raised.
- Add payment and delivery terms, then download the PDF instantly, no login required.
The One Thing Buyers and Sellers Both Get Wrong
A proforma invoice does not trigger any GST liability, even though the tool calculates GST on the document for reference. Don't report proforma invoices in your GST returns, only the actual tax invoice issued at the time of delivery counts. Keeping this distinction clear from the start avoids reconciliation headaches later when your accountant compares invoices against your GST filings.
Frequently Asked Questions
Is GST applicable on a proforma invoice?
No. GST is charged only on the final tax invoice issued after delivery. A proforma is a quotation or estimate, not a tax document, even though it typically shows the GST rate that will eventually apply.
How is a proforma invoice different from a quotation?
A quotation is a simple offer to sell at a stated price. A proforma invoice looks and reads like a formal invoice, and is used when the buyer needs a document for internal approvals, customs clearance, or a bank letter of credit, even though the sale isn't confirmed yet.
How long should a proforma invoice remain valid?
Typically 30 to 60 days. Always mention the validity date clearly on the document itself, since prices and stock availability can change and an expired proforma shouldn't be honored at old pricing.
Create your proforma invoice free with the Proforma Invoice Generator, no signup required.
