What is a proforma invoice — and when should you use one?
A proforma invoice is a formal quote that looks exactly like a real invoice but carries no tax liability. It's used before a buyer confirms an order — to give them the price, quantity, and terms before they commit.
Create proforma invoices free in GrowkitWhat is a proforma invoice?
A proforma invoice is a preliminary document sent to a buyer before they commit to a purchase. It looks like a real invoice — it has item descriptions, quantities, prices, and a total — but it is not a legally binding document. It creates no tax liability. The buyer cannot use it to claim Input Tax Credit (ITC).
It is, in plain terms, a formal quote in invoice format. The word "proforma" is Latin for "as a matter of form" — meaning it's a formality, not a final bill.
When to issue a proforma invoice
Custom manufacturing — before production starts
When a buyer asks you to manufacture 1000 custom parts, you send a proforma showing the per-unit price, total, and expected GST. The buyer approves it internally, then confirms. You convert it to a tax invoice when goods are dispatched. This protects you — if the buyer backs out after you've started production, you have a document showing what was quoted and implicitly accepted.
Large orders requiring internal buyer approval
Many corporate buyers need to get a purchase order (PO) approved internally before committing. They use your proforma to get that approval. Once they have PO approval, they confirm the order. You convert the proforma to a tax invoice.
Import/export — customs pre-clearance
For international shipments, customs authorities often require a proforma invoice to estimate duties before the actual goods arrive. This is standard practice in international trade. The proforma is used for customs purposes; the final tax invoice follows after goods are released.
Service quotes before the work begins
Service providers — consultants, contractors, repair shops — send proformas to quote the work before starting. The buyer approves, work begins, and the real invoice is raised on completion.
Proforma invoice vs GST tax invoice — side by side
| Aspect | Proforma invoice | GST tax invoice |
|---|---|---|
| Legal standing | Not legally binding — it's a quote | Legally binding — it's a record of sale |
| GST liability | No GST liability on the seller | GST must be remitted to the government |
| Buyer can claim ITC | No — no ITC on proforma | Yes — buyer claims ITC on tax invoice |
| Invoice number | Not required to be in GST invoice series | Must be sequential, in GST invoice series |
| When to issue | Before order confirmation | At or before time of supply |
| Can be edited | Yes — it's a draft, not final | No — issue credit/debit note instead |
| Effect on GST return | Not reported in GST returns | Must be reported in GSTR-1 |
What should a proforma invoice include?
A proforma invoice should look as close to your real invoice as possible — so the buyer knows exactly what the final invoice will look like when they confirm.
- Seller name, address, and GSTIN
- The words 'PROFORMA INVOICE' clearly at the top (not 'Tax Invoice')
- Proforma number and date
- Buyer name, address, and GSTIN
- Item descriptions, HSN codes, quantities, and unit prices
- Applicable GST rate and estimated GST amount (clearly marked as estimated)
- Total estimated value
- Validity period (e.g. 'This proforma is valid for 30 days')
- Payment terms if the order is confirmed
How to convert a proforma to a tax invoice in Growkit
When the buyer confirms their order, you convert the proforma to a GST tax invoice in one click in Growkit.
Proforma is locked
It cannot be edited after conversion — preserving the original quote as your audit trail.
New tax invoice is created
With the confirmed quantities and prices, pulling directly from the locked proforma.
Tax invoice gets a sequential number
In your GST invoice series. The proforma number stays separate.
Original proforma remains unchanged
Both documents — proforma and tax invoice — exist independently in your records.
Buyer sees both documents
On their secure invoice portal — the original quote and the final invoice.
Common mistakes with proforma invoices
Using a proforma as the final invoice
Buyer cannot claim ITC. Non-compliant under GST.
Numbering proformas in the same series as tax invoices
Creates gaps in your sequential tax invoice numbering — a red flag in GST audits.
Not including 'PROFORMA INVOICE' clearly
Buyer or their CA might treat it as a tax invoice and try to claim ITC — creating a compliance problem.
Sending a proforma and then raising a backdated tax invoice
Tax invoices must be dated at or near the time of supply — backdating is a GST violation.
Frequently asked questions
Does a proforma invoice need a GST number (GSTIN)?
Your GSTIN should appear on the proforma for professional purposes and so the buyer can verify your registration. However, unlike a tax invoice, the proforma does not need to follow GST invoice numbering rules — it can have its own numbering series.
Can I charge GST on a proforma invoice?
You can show the estimated GST amount on a proforma so the buyer knows what the final invoice will look like. However, you should label it clearly as 'Estimated GST' — not as actual GST charged. No GST is actually due until the tax invoice is issued.
If the buyer pays based on a proforma, do I need to issue a receipt voucher?
Yes. If the buyer pays you any amount before you issue the tax invoice — even if they're paying against a proforma — you must issue a Receipt Voucher for that advance payment. The proforma is not a receipt.
How long is a proforma invoice valid?
There's no legal minimum or maximum under GST. You decide the validity period and state it on the document. Typical validity is 15–30 days for product quotes and 7–14 days for services. After validity, prices may change.
Send proformas. Convert to tax invoices in one click.
Growkit keeps the original proforma and creates the tax invoice separately — your audit trail is always intact.
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