What is a proforma invoice in simple terms?

A proforma invoice is a preliminary price document that a seller sends to a buyer before the actual sale happens. It looks like an invoice and contains product details, quantities, prices, and estimated GST amounts, but it is not legally binding. The buyer uses it to understand the total cost, get internal approvals, or arrange financing. Once the buyer agrees, the seller issues an actual tax invoice. A proforma invoice cannot be used for GST filing, input tax credit claims, or as proof of sale. Think of it as a detailed formal quotation in invoice format.

Is a proforma invoice the same as a quotation?

No, though they serve similar purposes. A quotation is a general pricing document that may or may not include detailed tax breakdowns, delivery terms, or validity periods. A proforma invoice is more formal — it follows the exact invoice format with full product details, HSN codes, GST calculations, payment terms, and delivery timelines. In practice, quotations are used for initial discussions while proforma invoices come later when the deal is closer to confirmation. Some businesses skip quotations and go directly to proforma invoices for B2B transactions.

Can I claim GST input tax credit on a proforma invoice?

No. A proforma invoice is not a tax document under GST law. Only a proper tax invoice issued under Section 31 of the CGST Act qualifies for input tax credit claims. If your supplier sends you a proforma invoice, do not record it as a purchase invoice for ITC purposes. Wait for the actual tax invoice after the goods or services are supplied. Recording proforma invoices as purchases inflates your ITC claims and creates mismatches in GSTR-2B reconciliation, which can trigger GST notices.

Do I need to report proforma invoices in GSTR-1?

No. Proforma invoices are not reported in GSTR-1 or any other GST return. Only actual tax invoices, credit notes, and debit notes are reported. A proforma invoice creates no tax liability because it is issued before the supply takes place. Once the proforma is converted to a tax invoice, the tax invoice is reported in GSTR-1 in the normal course. If a proforma is sent but the deal falls through, there is no GST implication — the proforma is simply cancelled or expired.

How do I convert a proforma invoice to a tax invoice in myBillPlease?

In myBillPlease, open the proforma invoice you want to convert. Click the Convert to Invoice button at the top. All details — product items, quantities, rates, GST amounts, and customer information — transfer automatically to a new tax invoice. The invoice gets the next sequential number in your tax invoice series. The proforma is marked as converted and linked to the resulting invoice for easy tracking. This one-click conversion eliminates manual retyping and ensures no details are missed or changed between the proforma and the final invoice.

What is the difference between a proforma invoice and a commercial invoice?

A proforma invoice is a preliminary estimate sent before a transaction is confirmed. A commercial invoice is the final invoice issued after goods are shipped or services are delivered — it is the legally binding document used for customs clearance, payment processing, and tax compliance. In Indian domestic trade, the commercial invoice is your GST tax invoice. In international trade, the commercial invoice accompanies the shipment and is required by customs authorities in both countries. The proforma comes first as a price indication, the commercial invoice comes later as the actual billing document.

Is there a legal format for proforma invoices in India?

There is no GST-mandated format for proforma invoices because they are not tax documents. However, best practice is to follow a format similar to your tax invoice with clear differences. Mark the document prominently as PROFORMA INVOICE. Use a separate numbering series (PI-001 instead of INV-001). Include a validity period for the pricing. Include all product details, HSN codes, and GST estimates so the buyer knows the exact expected cost. When using myBillPlease, the system automatically formats proforma invoices with the correct headers and separate numbering series.

Invoicing & Formats

What is a Proforma Invoice? Format, Purpose, and How to Create One in 2026

A proforma invoice is a preliminary bill sent before a sale is confirmed. It is not a tax invoice and cannot be used for GST filing. Here is everything you need to know — with a free template.

Amresh Kumar23 March 2026 · 6 min read · updated 6 September 2026

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Key takeaways

A proforma invoice is a preliminary price document, not a tax document: no GST liability, no ITC, and no GSTR-1 reporting.
Mark it PROFORMA INVOICE, number it in a separate PI series, and state a validity period of 7, 15 or 30 days.
Show HSN codes and the CGST/SGST or IGST split so the customer knows the exact cost before committing.
Once approved, convert it to a sequential tax invoice rather than retyping; exports also need Incoterms, currency and 8-digit HSN.

What is a Proforma Invoice?

A proforma invoice is a preliminary document sent by a seller to a buyer before the actual sale takes place. Think of it as a detailed price quote that looks like an invoice but is not legally binding and cannot be used for GST filing or input tax credit claims. The word proforma means for the sake of form — it follows the invoice format but serves a different purpose.

In Indian business practice, proforma invoices are used heavily in B2B transactions. When a customer asks for a price before placing an order, you send a proforma invoice showing the products, quantities, rates, GST amounts, and total payable. If the customer agrees, the proforma converts into an actual tax invoice. If they negotiate or cancel, no tax liability is created because the proforma is not a tax document under GST.

We built myBillPlease with proforma invoices as one of the 8 supported document types. You can create a proforma, share it with your customer via email or WhatsApp, and convert it to a tax invoice with one click when approved — all details carry over automatically. Try our free proforma invoice generator to create one right now.

This guide covers the purpose of proforma invoices, how they differ from tax invoices and quotations, the correct format under Indian business practices, and common scenarios where you need them.

Proforma Invoice vs Tax Invoice vs Quotation

Three similar-looking documents with very different legal meanings

	Proforma Invoice	Tax Invoice	Quotation
Legal status	Not legally binding	Legally binding under GST	Not legally binding
GST compliance	Not a GST document	Mandatory under Section 31 CGST Act	Not a GST document
ITC claim	Customer cannot claim ITC	Customer can claim ITC	Customer cannot claim ITC
When issued	Before order confirmation	After supply of goods/services	During initial pricing discussion
Contains GST amount	Yes — estimated	Yes — actual and final	May or may not
Invoice number	Separate PI series	Sequential tax invoice number	Separate quote number
Reported in GSTR-1	No	Yes — mandatory	No
Level of detail	Full product and price details	Full with all 16 mandatory fields	May be summary-level
Converts to	Tax invoice (after approval)	Final — no conversion needed	Proforma or tax invoice

When Do You Need a Proforma Invoice?

Common business scenarios where proforma invoices are used

Customer requests a detailed price before placing the order — more formal than a quotation
Export transactions — customs authorities often require proforma invoices for import clearance in the buyer's country
Advance payment requests — the proforma shows the customer exactly what they are paying for before sending money
Bank financing — the buyer's bank may need a proforma invoice to process a letter of credit or foreign exchange
Government or institutional buyers — tender processes often require proforma invoices before purchase orders are issued
Large B2B orders — when the order value is significant and the buyer needs internal approval before committing
International trade — proforma invoices help calculate customs duties and import taxes in the destination country
Recurring supply agreements — initial proforma sets the terms before regular tax invoices begin

Proforma Invoice Format: What to Include

While there is no GST-mandated format for proforma invoices (since they are not tax documents), a professional proforma should include all the details that will appear on the final tax invoice. This makes the conversion seamless and gives the customer a clear picture of the final cost.

Header: Clearly mark the document as PROFORMA INVOICE — not Invoice or Tax Invoice. This distinction is critical because using it as a tax document is illegal.

Seller details: Your business name, address, GSTIN, and contact information.

Buyer details: Customer name, address, GSTIN (if they have one), and contact details.

Document details: Proforma invoice number (in a separate series like PI-001, PI-002), date of issue, and validity period (how long the pricing is valid — typically 7, 15, or 30 days).

Item details: Product or service description, HSN/SAC code, quantity, unit price, discount if any, and GST rate. Show the CGST + SGST or IGST split just like a tax invoice so the customer knows the exact tax component.

Total: Subtotal, tax amount, and grand total. Include terms and conditions, payment terms, and delivery timeline.

Use our free proforma invoice generator to create a professional proforma with all these fields. Or use the quotation format template as a starting point. In myBillPlease, you select Proforma Invoice as the document type and all fields are pre-configured — including the separate numbering series.

How to Convert a Proforma Invoice to a Tax Invoice

The most powerful feature of proforma invoices in billing software is the one-click conversion to a tax invoice. In myBillPlease, here is how it works:

Proforma to tax invoice

Create the proforma with all product details, quantities and GST rates, and share it by email or WhatsApp.
Let the customer review and approve; edit the proforma if they request changes.
Open the approved proforma and click Convert to Invoice; all details transfer and it takes the next tax invoice number.
The tax invoice is now a legal GST document: reported in GSTR-1, ITC-claimable by the customer, counted as revenue.

This workflow saves significant time on large orders. Instead of retyping all details from the proforma into an invoice, one click does it. The proforma is marked as converted and linked to the resulting invoice for audit trail purposes.

Without billing software, you would need to manually copy every line item, recalculate taxes, and ensure the invoice format meets all GST mandatory fields. The risk of errors is high, especially for invoices with 20+ line items.

Common Proforma Invoice Mistakes

Using It as a Tax Invoice

A proforma is NOT a tax invoice. If you share a proforma and the customer treats it as a final bill for ITC claims, both parties face compliance issues. Always clearly mark it as PROFORMA INVOICE.

No Validity Period

Prices change. A proforma without a validity period can be used months later at outdated prices. Always state: 'Valid for 15 days from date of issue' or similar.

Same Number Series as Invoices

Proforma invoices must have a SEPARATE number series from tax invoices. Using the same series creates gaps in your invoice sequence, which is a GST compliance red flag.

Missing GST Breakdown

Even though proformas are not tax documents, including the GST breakdown helps the customer budget accurately. Show CGST + SGST or IGST just like a real invoice.

Not Converting to Invoice

If the sale goes through, you MUST issue a proper tax invoice. The proforma does not replace it. Revenue from proformas that are never converted to invoices gets missed in GSTR filing.

No Terms and Conditions

Payment terms, delivery timeline, warranty, and cancellation policy should be on the proforma. This sets clear expectations before the customer commits.

Proforma Invoices for Export Transactions

In international trade, proforma invoices play a more important role than in domestic sales. The buyer's customs authority often requires a proforma invoice to determine import duties and clear the goods. Banks use proforma invoices to process letters of credit and foreign exchange transactions.

For export proforma invoices from India, include these additional details beyond the standard format: the buyer's country and address, Incoterms (FOB, CIF, EXW, etc.), currency of transaction, exchange rate if applicable, shipping method and estimated delivery date, port of loading and destination, and export-specific HSN codes (8 digits).

Under GST, export of goods and services is zero-rated. Your proforma should show the applicable GST rate as 0% for exports, with a note that the supply is zero-rated under the IGST Act. When the proforma converts to a tax invoice, the 0% rate carries over and the invoice is reported in GSTR-1 as an export supply.

Use the HSN code directory to find the correct 8-digit export HSN codes for your products. Incorrect HSN codes on export documents can cause customs clearance delays at both the Indian port and the destination country.

Create Proforma Invoices in 30 Seconds — Free

Two ways to create proforma invoices:

Quick one-off: Use our free proforma invoice generator. Fill in details, download PDF. No signup needed.

Ongoing business use: Sign up for myBillPlease (free). Create proformas, share via email/WhatsApp, convert to tax invoices with one click when approved. All proformas tracked with separate numbering, linked to resulting invoices, and data feeds into your GSTR reports. 7 professional PDF templates included.

Frequently asked questions

What is a proforma invoice in simple terms?: A proforma invoice is a preliminary price document that a seller sends to a buyer before the actual sale happens. It looks like an invoice and contains product details, quantities, prices, and estimated GST amounts, but it is not legally binding. The buyer uses it to understand the total cost, get internal approvals, or arrange financing. Once the buyer agrees, the seller issues an actual tax invoice. A proforma invoice cannot be used for GST filing, input tax credit claims, or as proof of sale. Think of it as a detailed formal quotation in invoice format.
Is a proforma invoice the same as a quotation?: No, though they serve similar purposes. A quotation is a general pricing document that may or may not include detailed tax breakdowns, delivery terms, or validity periods. A proforma invoice is more formal — it follows the exact invoice format with full product details, HSN codes, GST calculations, payment terms, and delivery timelines. In practice, quotations are used for initial discussions while proforma invoices come later when the deal is closer to confirmation. Some businesses skip quotations and go directly to proforma invoices for B2B transactions.
Can I claim GST input tax credit on a proforma invoice?: No. A proforma invoice is not a tax document under GST law. Only a proper tax invoice issued under Section 31 of the CGST Act qualifies for input tax credit claims. If your supplier sends you a proforma invoice, do not record it as a purchase invoice for ITC purposes. Wait for the actual tax invoice after the goods or services are supplied. Recording proforma invoices as purchases inflates your ITC claims and creates mismatches in GSTR-2B reconciliation, which can trigger GST notices.
Do I need to report proforma invoices in GSTR-1?: No. Proforma invoices are not reported in GSTR-1 or any other GST return. Only actual tax invoices, credit notes, and debit notes are reported. A proforma invoice creates no tax liability because it is issued before the supply takes place. Once the proforma is converted to a tax invoice, the tax invoice is reported in GSTR-1 in the normal course. If a proforma is sent but the deal falls through, there is no GST implication — the proforma is simply cancelled or expired.
How do I convert a proforma invoice to a tax invoice in myBillPlease?: In myBillPlease, open the proforma invoice you want to convert. Click the Convert to Invoice button at the top. All details — product items, quantities, rates, GST amounts, and customer information — transfer automatically to a new tax invoice. The invoice gets the next sequential number in your tax invoice series. The proforma is marked as converted and linked to the resulting invoice for easy tracking. This one-click conversion eliminates manual retyping and ensures no details are missed or changed between the proforma and the final invoice.
What is the difference between a proforma invoice and a commercial invoice?: A proforma invoice is a preliminary estimate sent before a transaction is confirmed. A commercial invoice is the final invoice issued after goods are shipped or services are delivered — it is the legally binding document used for customs clearance, payment processing, and tax compliance. In Indian domestic trade, the commercial invoice is your GST tax invoice. In international trade, the commercial invoice accompanies the shipment and is required by customs authorities in both countries. The proforma comes first as a price indication, the commercial invoice comes later as the actual billing document.
Is there a legal format for proforma invoices in India?: There is no GST-mandated format for proforma invoices because they are not tax documents. However, best practice is to follow a format similar to your tax invoice with clear differences. Mark the document prominently as PROFORMA INVOICE. Use a separate numbering series (PI-001 instead of INV-001). Include a validity period for the pricing. Include all product details, HSN codes, and GST estimates so the buyer knows the exact expected cost. When using myBillPlease, the system automatically formats proforma invoices with the correct headers and separate numbering series.