Proforma invoice — meaning, format, and when to actually use one
A proforma invoice is one of those documents that everyone has heard of and almost no one uses correctly. Exporters treat it as a quotation. Small businesses call it an "advance bill". And customs officers reject them for missing fields half the time. Here's what a proforma invoice really is, and how to make one that works.
The three-line definition
A proforma invoice is a preliminary bill of sale sent to a buyer before goods are dispatched or a service is rendered. It looks almost identical to a regular invoice, but it is not a demand for payment and it does not create a legal receivable in your books.
When you should send a proforma invoice
- Advance payment scenarios. The customer wants to know the exact amount before paying an advance. A proforma gives them a document to attach to the payment.
- Imports and exports. Buyers need a proforma to open a letter of credit (LC) or apply for import authorisation.
- Government tenders. Public sector buyers often ask for a proforma before generating a purchase order.
- Custom-manufactured goods. Where the final price may change slightly based on production tolerances.
- Large-ticket B2B sales. A proforma is a courtesy step before the tax invoice — it confirms the scope of supply.
Proforma vs tax invoice — the differences that matter
| Proforma invoice | Tax invoice | |
|---|---|---|
| When is it issued | Before sale / before delivery | At or after delivery |
| Legal receivable | No | Yes |
| Recorded in GST returns | No | Yes |
| Input tax credit for buyer | Not available | Available |
| Invoice numbering | Own series (usually PI/…) | Continuous GST series |
| Marked as | "Proforma Invoice — Not a Tax Invoice" | "Tax Invoice" |
Proforma invoice format — the eight essential fields
- Header clearly marked PROFORMA INVOICE — do not just write "invoice"
- Proforma number (own series, e.g. PI/2026/001) and date
- Validity period — how long the quoted price stays valid
- Seller's name, address, GSTIN, contact details
- Buyer's name, address, GSTIN if applicable
- Description of goods/services, HSN/SAC, quantity, rate, taxable value
- Estimated GST (breakup by CGST/SGST/IGST)
- Terms — payment method, delivery timeline, banking details, cancellation policy
How to create a proforma invoice using our generator
- Open the invoice generator.
- In the invoice-number field, use a "PI/" prefix (e.g.
PI/2026/001). - Add a note in the Notes section: "This is a Proforma Invoice — not a demand for payment. Valid for 15 days."
- Fill items, tax, and terms as usual.
- Download PDF and email to the buyer.
When the sale is confirmed and goods dispatched, create a fresh GST tax invoice with a proper series.
Proforma invoice sample
Here's a plain-English version of what your proforma should read like:
PROFORMA INVOICE — PI/2026/017
Date: 12 February 2026
Valid till: 27 February 2026From: Sunrise Traders, Pune, GSTIN 27ABCDE1234F1Z5
To: Green Grocers, Mumbai, GSTIN 27FGHIJ5678K2Z9Description: 500 kg Basmati Rice (HSN 1006) @ ₹85/kg
Taxable value: ₹42,500
GST @ 5%: ₹2,125
Total: ₹44,625Note: This is a Proforma Invoice — it is not a tax invoice and does not create a payable obligation. Payment to be made against the tax invoice which will be issued upon dispatch.
FAQs
Can a proforma invoice be treated as a purchase order by the buyer?
Yes — many buyers use it as an internal PO for their books. But it does not replace a formal purchase order for procurement audits.
Do I have to charge GST on a proforma invoice?
No — since it is not a supply. You show the estimated GST so the buyer knows the final cost, but no tax is payable to the government at this stage.
Is a proforma invoice legally binding?
Only to the extent of price and terms quoted. It is a commitment to sell at those terms if the buyer accepts. It does not create a debt.
What if the buyer pays against the proforma?
You must issue a "receipt voucher" for the advance and later adjust it in the final tax invoice.