How to Make a Proforma Invoice: GST Guide

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By Raseed Raseed Editorial Team

Last Updated Nov 5, 2026 · 1:52 PM

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A customer wants to place a large order. Before confirming it, they want to know the price, quantity, GST, payment terms, and delivery details. You could send all of this information through separate messages or emails. But when several details need to be agreed upon, having everything in one document makes the conversation much clearer.

That is where a Proforma Invoice can help.

It gives the buyer a clear picture of the proposed transaction before the final invoice is issued. For businesses in India, however, it is important to understand that a proforma invoice is not the same as a GST tax invoice.

So, what should you include in one? How should GST details be shown? And what happens when the customer confirms the order?

Let’s look at it step by step.

What is a Proforma Invoice?

A proforma invoice is a preliminary document shared with a buyer before the actual sale or supply is completed. It presents the expected details of a transaction, including the products or services, quantities, prices, applicable taxes, payment terms, and delivery information.

Think of it as a detailed proposal for a transaction rather than the final bill.

For example, suppose a distributor is planning to supply 100 units of a product to a retailer. Before the retailer confirms the order, the distributor can send a proforma invoice showing the quantity, price per unit, applicable GST, total estimated amount, and payment terms.

The buyer can review these details and confirm whether they are ready to proceed. Once the transaction moves forward, the appropriate final invoice can then be issued.

Is a Proforma Invoice Valid Under GST?

This is where the distinction between a proforma invoice and a tax invoice becomes important. A proforma invoice is not a GST tax invoice. It is a preliminary document used to communicate the proposed terms of a transaction.

Therefore, issuing one does not make it a substitute for the tax invoice required for an actual taxable supply.

It also should not be treated as the document for claiming Input Tax Credit. The relevant final tax documents need to be available for the recipient to claim eligible ITC according to GST rules.

Similarly, businesses should not treat a proforma invoice as a document that needs to be reported as a tax invoice in their GST returns.

The simple way to remember it is:

Proforma Invoice = Proposed transaction details

Tax Invoice = Final invoice for the applicable supply

Keeping this distinction clear can prevent confusion for both the customer and the accounts team.

What Should a Proforma Invoice Contain?

There is no need to make a proforma invoice complicated. Its main purpose is to make the proposed transaction easy to understand. A typical document can include:

Business name, address, and contact details
GSTIN of the seller, where applicable
Buyer name, address, and GSTIN where applicable
Proforma invoice reference number
Date of issue
Validity period
Product or service description
HSN or SAC code, where relevant
Quantity and unit price
Discounts, if applicable
Estimated taxable value
Applicable GST details
Place of supply details where relevant
Payment terms
Delivery information
Terms and conditions
A clear statement that the document is a proforma invoice and not a final tax invoice

The goal is simple: when the customer looks at the document, they should be able to understand exactly what is being proposed.

How to Make a Proforma Invoice

Once you know what information belongs in the document, creating one becomes straightforward.

1. Start With the Seller and Buyer Details

Begin with your business information, including the business name, address, contact details, and GSTIN where applicable. Then add the customer’s details. If you are dealing with another GST registered business, include its GSTIN as well.

Getting these details right at this stage can also make the final invoicing process easier later.

2. Give It a Separate Reference Number

Clearly label the document PROFORMA INVOICE.

You can assign it a reference number that is separate from your regular tax invoice numbering. This helps distinguish preliminary documents from actual invoices in your records.

Also mention the date and, where applicable, how long the quoted prices or terms remain valid.

3. Add the Proposed Products or Services

Next comes the main part of the document: what you are offering. List each product or service separately and include details such as:

Description
HSN or SAC code, where relevant
Quantity
Unit
Price
Discount
Estimated amount

Avoid vague descriptions, especially when several products or service variations are involved. The buyer should be able to identify what each line item represents.

4. Show the GST Details

If GST applies to the proposed transaction, show the applicable tax rate and estimated tax amount. For an intra state transaction, the relevant CGST and SGST components can be shown separately. For an interstate transaction, IGST may apply.

The tax shown here represents the proposed transaction details. The final tax invoice must contain the applicable particulars required under GST.

5. Mention Payment and Delivery Terms

This section helps avoid misunderstandings after the customer accepts the proposal. Mention whether an advance is required, when the balance amount is payable, and any expected delivery timeline.

For example, you could specify a percentage as advance payment and the remaining amount against delivery, depending on the terms agreed with the customer.

If the quoted prices are valid only for a particular period, mention the validity date as well.

6. Make It Clear That It Is Not the Final Invoice

One of the simplest but most important details is the document’s identity.

Clearly state that it is a Proforma Invoice and not a final tax invoice.

This makes it easier for the customer and internal accounts team to distinguish the preliminary document from the invoice issued for the actual supply.

Proforma Invoice vs Tax Invoice

The difference becomes easier to understand when you look at their purpose.

Proforma Invoice	Tax Invoice
Used before the final transaction documentation	Issued for the applicable taxable supply
Provides proposed prices and terms	Records the actual invoice details
Not a GST tax invoice	GST tax invoice where applicable
Not used by itself for claiming ITC	Relevant tax invoice can support eligible ITC subject to GST conditions
Used for customer review and confirmation	Used as the final billing document

The two documents can look similar, but their purpose is different. A proforma invoice communicates what the transaction is expected to look like, while the final tax invoice documents the actual supply.

Make Every Proposed Transaction Clear

A Proforma Invoice is useful when a customer needs to understand the complete transaction before committing it.

Instead of discussing quantities, prices, taxes, payment terms, and delivery separately, you can put the proposed details together in one clear document.

Just remember that a proforma invoice is a preliminary document, not a replacement for the final GST tax invoice. Once the actual supply takes place, the appropriate GST documentation should be issued based on the transaction.

With the right billing process, businesses can make this transition from proposal to final invoice much easier and keep their records organized along the way.