Proforma invoice format

Section 2(66) of the CGST Act defines the word exhaustively: “‘invoice’ or ‘tax invoice’ means the tax invoice referred to in section 31.” A proforma invoice is not one. The expression does not appear in Section 31, or in Rules 46, 47, 47A, 48, 49, 50 or 51 — the whole invoicing chapter. There is no prescribed format, no prescribed numbering rule, and nothing to file.

It is a commercial document with a settled meaning and no statutory identity, used for four things: quoting a firm price with the tax shown, getting an advance released, giving a buyer something to raise a purchase order against, and supporting an application to open a letter of credit or clear customs.

The four things that go wrong

1. Heading it “Invoice”

Because Section 2(66) reads “invoice” as the Section 31 tax invoice, a document headed that way is read as one. The time of supply can then be pulled forward to the date on it, and a document issued without an actual supply is its own offence under Section 122(1)(ii). Head it PROFORMA INVOICE — which is what the generator on this page prints, along with a line stating that it is not a tax invoice and that no credit may be claimed against it.

2. Numbering it from the invoice book

Rule 46(b) requires the tax invoice serial number to be consecutive and unique for the financial year. Every number burned on a proforma that never converts leaves a gap in that sequence, and a gap in an invoice series is what a scrutiny officer reads as a suppressed sale. The same clause permits “one or multiple series”, which is the licence to run PI-2026-001 separately from INV-2026-001. This tool keeps a separate running number for each document type for that reason.

3. Letting the client claim credit against it

Rule 36(1) lists exhaustively what input tax credit may be availed on: a Section 31 invoice, a Section 31(3)(f) self-invoice for reverse charge, a debit note under Section 34, a bill of entry, and an ISD invoice. A proforma is none of these. It happens anyway, because a proforma looks like an invoice, and the credit is then reversible with interest.

4. Taking the advance and issuing nothing else

This is the one with a real deadline attached. When money arrives before the supply, Section 31(3)(d) requires a receipt voucher, and Rule 50 sets its particulars — supplier and recipient details, description, amount of advance, rate of tax, amount of tax, and whether tax is payable on reverse charge. The proforma does not satisfy that requirement.

Rule 50’s proviso is written for exactly this moment:

• where the rate of tax is not determinable, the tax is to be paid at 18%;
• where the nature of supply is not determinable, it is to be treated as an inter-State supply.

If the deal then collapses and no supply is made, Section 31(3)(e) and Rule 51 provide the way back out: a refund voucher, carrying the number and date of the receipt voucher it reverses.

Whether the advance itself is taxable

It depends on what you are supplying, and the two answers are opposite.

• Services — yes. Section 13(2)(a) makes the time of supply the earlier of the invoice date and the date of receipt of payment. The money arriving is the taxable event.
• Goods — no. Notification 66/2017-Central Tax relieved registered persons who have not opted for the composition levy from paying tax on advances received for goods. The liability waits for the supply.

Exports and letters of credit

A proforma is the standard document a buyer takes to their bank to have a letter of credit opened, and it supports advance remittance and customs pre-clearance. What it cannot do is be presented under the credit: ISBP 745 paragraph C1(a) says an invoice presented under a documentary credit is not to be identified as “provisional”, “pro-forma” or the like, and UCP 600 article 18 governs the commercial invoice that is presented instead.

The export endorsement — the “SUPPLY MEANT FOR EXPORT…” wording required by a proviso to Rule 46 — belongs on the tax invoice, not on the proforma that preceded it. The tax invoice requirements are here.

The handover

A proforma has no deadline. The tax invoice that replaces it does, and the clock is not started by the proforma:

• Goods: before or at the time of removal where the supply involves movement, or of delivery otherwise (Section 31(1)).
• Services: within thirty days of the supply (Rule 47).

The practical route is: proforma → receipt voucher when money arrives → tax invoice when the supply happens, adjusting the advance. Keep the proforma out of your books as revenue while that is in progress. Posting it to sales inflates turnover, breaks the reconciliation between GSTR-1 and the books, and can push a business over a threshold it has not actually crossed.

Proforma or quotation?

A proforma is what you send when the deal is essentially agreed and money or shipping documents are about to move. A quotation is what you send when you are still competing for the work, and it is governed by contract law rather than tax law — when it expires, and when it turns into a binding agreement, are the questions that matter there.