Proforma Invoice vs Tax Invoice
A proforma invoice and a tax invoice look similar but do very different jobs. In short: a proforma invoice is a quotation sent before a sale, while a tax invoice is the legal record issued after it. Here is exactly how they differ and when to use each.
At a glance
| Proforma invoice | Tax invoice | |
|---|---|---|
| When issued | Before the sale | After the sale is confirmed |
| Purpose | Quotation / estimate | Legal record of the transaction |
| Legally binding | No | Yes |
| Recorded in accounts | No | Yes |
| GST input credit | Cannot be claimed | The document credit is claimed on |
| Can change | Yes — it is only an estimate | Fixed once issued (corrected by credit/debit note) |
What a proforma invoice is for
A proforma invoice is a good-faith estimate. You send it so a buyer can approve the price, arrange internal purchase approvals or financing, request an advance, or declare a shipment’s value to customs before goods move. Because it is not a completed sale, the figures can still change and nothing is entered in your books.
What a tax invoice is for
A tax invoice is issued once the sale is confirmed and goods or services are supplied. It is legally binding, is recorded in your accounts, and is the document your customer uses to claim input tax credit (GST in India, VAT elsewhere). It must carry the specific fields your tax authority requires.
The typical order of events
- Customer asks for a quote → you send a proforma invoice.
- Customer approves and (often) pays an advance.
- You deliver the goods or services.
- You issue a tax invoice → recorded in your books; customer claims credit.
Need to send a quotation now? Create a clean, professional proforma invoice and download it as PDF, Word or Excel — free, no login.
Related reading
- What is a proforma invoice? Meaning & full guide
- Proforma invoice format & free template
- GST proforma invoice format (India)
Frequently asked questions
What is the difference between a proforma invoice and a tax invoice?
A proforma invoice is issued before a sale as a quotation or estimate and creates no accounting or tax liability. A tax invoice is issued after the sale is confirmed, is legally binding, is recorded in your books, and — in India — is the document on which GST input tax credit is claimed.
Can a proforma invoice be used for payment?
A proforma invoice can be used to request an advance or confirm an order, but it is not a legal demand for payment and does not record a completed sale. Once the sale is confirmed you should issue a proper tax invoice.
Can I claim GST input credit on a proforma invoice?
No. A proforma invoice is not a valid document for claiming GST input tax credit. The buyer claims credit only on the final tax invoice issued after the sale.
Does a proforma invoice need to be recorded in accounts?
No. Because a proforma invoice is only a quotation, it is not entered in your books of accounts. Only the tax invoice issued after the sale is recorded.
Which should I send — a proforma invoice or a tax invoice?
Send a proforma invoice when you are quoting, seeking approval, or requesting an advance before delivery. Send a tax invoice once the sale is confirmed and goods or services have been (or are being) supplied.