Fast Summary: Proforma vs Tax Invoice
| Feature | Proforma Invoice | Tax Invoice |
|---|---|---|
| Legal Status | Informal preliminary quote / commitment | Legally binding accounting and tax document |
| Tax Liability | Does NOT trigger GST liability in accounting | Triggers immediate tax liability for the billing month |
| Input Tax Credit (ITC) | Buyer CANNOT claim ITC on a proforma | Buyer CAN claim ITC on a valid tax invoice |
| When Issued | Before work begins or goods ship (For advance deposit) | After work is delivered or payment is received |
| Invoice Numbering | Can use separate series (e.g. PI-2026-001) | Must follow strict chronological fiscal sequence |
When to Issue a Proforma Invoice
- Advance Deposit Requests: Asking for a 50% upfront retainer before starting a custom software project or manufacturing run.
- Customs & International Shipments: Customs officers require a proforma invoice showing valuation to clear cross-border freight.
- Corporate Purchase Order (PO) Approvals: Client procurement teams often require a proforma invoice to generate an official PO.
Use the free Proforma Invoice Generator on Tools24Now to issue clear, preliminary billing commitments.