Businesses use several documents before and after a sale. Two of the most confused are the proforma invoice and the tax invoice.
What is a proforma invoice?
A proforma invoice is a preliminary bill sent before goods are delivered or services are completed. It states what you intend to supply and at what price. It is often used to:
- Request an advance payment before dispatching goods.
- Help a buyer arrange funds, permits or import documentation.
- Confirm quantities and prices before the final bill.
A proforma invoice is generally not a demand for tax payment and is not used to claim input tax credit.
What is a tax invoice?
A tax invoice is the formal document issued for a taxable sale. It records the sale and shows the tax charged — GST in India or VAT in Thailand and Vietnam. Buyers typically need it for their own tax records. See our GST invoice guide.
Quotation vs proforma vs tax invoice
| Quotation | Proforma invoice | Tax invoice | |
|---|---|---|---|
| When | Before agreeing | Before delivery or payment | At or after supply |
| Binding | Offer with a validity date | Confirms the intended order | Legal record of the sale |
| Used for | Price comparison | Advance payment, paperwork | Accounts and tax |
Converting between documents
In Onyx Bills you can send a quotation with a validity date, track acceptance and convert it to an invoice in one step. You can also bill with a proforma before goods ship and convert it once payment is confirmed. See Onyx Bills features.
Frequently asked questions
Can I claim tax credit on a proforma invoice?
Generally no. Credit is usually claimed against a valid tax invoice. Confirm the rules with your accountant.
Does a proforma invoice need an invoice number?
It should have its own reference number, separate from your tax invoice series.
What if the final amount changes?
Issue the tax invoice for the actual supply. Keep the proforma as a reference and cancel or convert it.
This guide is general information, not accounting, tax or legal advice. Rules and rates change, so confirm the current position with a qualified professional.