Proforma invoice format

A proforma invoice looks like the final invoice: same seller, buyer, items, prices and tax. The difference is its purpose. It is a commitment to sell on those terms, sent before the goods leave, so the buyer can arrange payment, approvals, a loan, an import licence or a letter of credit.

Once the goods are dispatched or the service is done, you issue the real tax invoice. The proforma itself is never entered in your sales register or GST returns.

A proforma is also useful inside your own business. Sales staff can send one to confirm an order in writing, accounts can check that the advance received matches it, and the warehouse can prepare the goods. When you convert it, the final invoice can differ if quantities change at dispatch; the proforma itself is never edited into the tax invoice.

When to use it

• The buyer pays in advance and needs a document showing the amount.
• The buyer's purchase department or bank needs a priced document before approving.
• Export orders, where the buyer needs it for their import formalities.
• Large orders where price, tax and freight should be agreed in writing before production.

GST law has no provision for a proforma invoice. It is not a tax invoice under section 31, carries no invoice number from your tax series, and is not reported in GSTR-1. To make that clear, title it “Proforma invoice” and avoid wording such as “tax invoice”.

If the buyer pays an advance against it, the rules for advances apply: for services, GST is payable on the advance and you issue a receipt voucher (section 31(3)(d), Rule 50). For goods, GST on advances is not payable for normal taxpayers (Notification 66/2017-Central Tax), though a receipt voucher is still the proper acknowledgement.