Glossary Invoice
Proforma invoice
Definition
A proforma invoice is a preliminary bill sent before a sale, showing items, prices, taxes and terms so the buyer can approve the order or pay an advance.
Example
A Coimbatore pump maker sends a proforma invoice to a farm buyer for 3 pumps at ₹42,000 each plus GST, with 30% advance and bank details. The buyer uses it to get its loan sanctioned and pays the advance. When the pumps ship, a numbered tax invoice is issued and the advance is adjusted.
Proforma invoice in TallyPrime and in Cashflow OS
Where to find itIn TallyPrime
TallyPrime has no voucher type named proforma invoice. Businesses often use a sales order or a custom non-accounting voucher type printed with a proforma title, so it does not touch the accounts or GST reports.
On your phoneIn Cashflow OS
Cashflow OS makes proforma invoices with your logo, letterhead, bank and UPI details, shares them as PDF on WhatsApp or email, and converts them into Tally sales orders or invoices.
See Proforma invoices
Common misunderstandings
- Watch outEntering a proforma as a sale in the books, which inflates sales and GST liability.
- Watch outLetting the buyer claim ITC on a proforma. Only the tax invoice supports a credit claim.
What it is used for
- Getting a buyer's written approval of price and terms before goods are dispatched.
- Asking for an advance or full payment before supply.
- Helping the buyer arrange a loan, letter of credit or internal purchase approval.
- Import and export paperwork, where a proforma is often needed before the deal is final.
It is not a demand for tax and does not record a sale, so it does not go in your sales register or GSTR-1, and the buyer cannot claim input tax credit on it.
Example
A solar installer quotes a school for a 10 kW system. After the price is agreed, it sends a proforma invoice: panels, inverter and installation, taxable value ₹4,80,000, GST shown at the applicable rates, total payable, 50% advance, delivery in 15 days, bank and UPI details. The school pays ₹2,70,000 as advance. When the system is delivered and installed, the installer issues a tax invoice with its own invoice number, adjusts the advance, and reports the tax invoice in GSTR-1. GST on an advance for services may become payable when the advance is received; for goods it generally is not. See GST on advances received.
Proforma vs tax invoice
| Proforma invoice | Tax invoice | |
|---|---|---|
| When | Before supply | At or before supply |
| Records a sale | No | Yes |
| Buyer can claim ITC | No | Yes, if conditions are met |
| Numbering | Own series | GST invoice series |
More in proforma invoice vs tax invoice.
Where it shows up in TallyPrime
TallyPrime has no voucher type called proforma invoice. Businesses usually create a sales order or a custom voucher type (often non-accounting or optional) and print it with a “Proforma Invoice” title, so it does not touch accounts or GST reports. In Cashflow OS, the documents add-on creates proforma invoices with the business's logo, letterhead and bank and UPI details, shares them as PDF on WhatsApp or email, and they stay out of the books until converted.
This is general information, not tax advice.
Related terms
Questions about Proforma invoice
Is GST charged on a proforma invoice?
Can a proforma invoice be cancelled?
Is a proforma invoice the same as a quotation?
Should a proforma invoice have a number?
How long is a proforma invoice valid?
This page is general information for Indian businesses, not tax, legal or financial advice. Rules and rates change — check the official portals or your CA before acting.
