Proforma invoice vs tax invoice: the difference, and when to use each
A proforma invoice is a preliminary bill sent before a sale is final, to confirm price and terms or ask for an advance; it is not a demand for payment and you cannot claim tax credit on it. A tax invoice is the legal record of a completed sale, carries the tax, and is what the buyer uses to claim input tax credit.
Updated
The two documents side by side
| Proforma invoice | Tax invoice | |
|---|---|---|
| When it is sent | Before the sale is confirmed | When the goods are supplied or the service is done |
| Legal status | A quotation in invoice form; not a tax document | The legal record of the sale |
| Records tax for the seller | No | Yes |
| Buyer can claim input tax credit | No | Yes (in India, under GST) |
| Typical use | Advance payment, import or bank paperwork, confirming an order | Billing the completed sale |
| Numbering | Its own series, if numbered | A unique series of up to 16 characters per financial year in India |
When to send a proforma invoice
- The buyer needs a formal document to approve a purchase or release an advance
- An importer needs it to open a letter of credit or arrange customs paperwork
- You want the buyer to confirm the price, quantities and terms before you deliver
When to issue the tax invoice
Once the sale happens. In India, a tax invoice for goods is issued before or at the time of removal or delivery, and for services within 30 days of the supply. If you take an advance for services, GST rules ask for a receipt voucher against it.
The usual flow is proforma, then payment or confirmation, then a tax invoice with the same lines. In JenVoice, once you sign in free, a quotation or proforma becomes the tax invoice in one click, so nothing is retyped.