A proforma invoice is a preliminary bill — an offer showing what you'll charge — while a tax invoice is the final, legally recognised bill that records a supply for GST. A proforma carries no tax liability, isn't reported in GST returns and doesn't go on your EDF; a tax invoice does all three. Exporters use proformas mainly to agree terms and collect advances from foreign clients, then raise the tax invoice when the service is supplied or as GST timing rules require.
Key takeaways
- A proforma is a quote dressed as an invoice; a tax invoice is the real bill.
- Only tax invoices are recorded in your books as sales, reported for GST and listed in Part 2B of the EDF.
- Number proformas in a separate series so they never break your tax-invoice sequence.
- Foreign clients often need a proforma to approve a payment or release an advance.
- When an advance arrives against a proforma, track it carefully — it must later match a tax invoice.
Side-by-side comparison
| Point | Proforma invoice | Tax invoice |
|---|---|---|
| Purpose | Shows proposed charges; gets approval or advance | Records the actual supply and the amount due |
| Legal status for GST | Not a GST document | Required under GST rules |
| Tax liability | None | Creates liability (or zero-rated export under LUT) |
| GST return | Not reported | Reported |
| EDF (export of services) | Not listed | Each export invoice is a Part 2B row |
| Accounting | Not a sale | Booked as revenue |
| Numbering | Separate series, e.g. PF/26-27/01 | Consecutive, up to 16 characters, unique per financial year |
| Can it change? | Yes, freely revised until accepted | Changes need a credit or debit note |
| Title on document | "Proforma Invoice" | "Tax Invoice" (or "Invoice" with export wording) |
| Client use | Budget approval, purchase orders, advance payment | Payment, their own tax and accounts |
When to use a proforma
Proformas are useful in situations like these:
- A foreign client's procurement team needs a document to create a purchase order. Many large companies won't raise a PO from a quote in an email.
- You want an advance before starting work. The proforma tells the client exactly what to pay and where.
- Terms might still change. Scope, quantity or price are under discussion and you don't want to raise and then cancel a tax invoice.
- The client's bank needs supporting paperwork to send money abroad, which some countries require before releasing funds.
Our proforma invoice generator creates one with your bank details and payment instructions. If you're still at the "what would this cost" stage, a quotation may be the better document — our article on quotation vs estimate vs proforma explains the difference.
What a good proforma contains
A proforma for a foreign client should look professional enough to clear their procurement process:
- the clear title "Proforma Invoice" and its own number and date
- your legal name, address and GSTIN, and the client's full name and address
- a description of the services, quantity or hours, rate and total in the agreed currency
- a validity date, after which the price may change
- payment instructions with your bank's SWIFT code, and a request to quote the proforma number
- a note that a tax invoice will follow on supply
When to issue the tax invoice
A tax invoice is issued when the supply is made, within the time GST rules allow for services. For exporters, that's the invoice that matters for compliance:
- GST: it's reported in your returns. For an export under LUT, it carries "Supply meant for export under LUT without payment of IGST".
- EDF: since 1 October 2026, every export invoice goes into your monthly EDF, one row in Part 2B, filed within 30 days from the end of the invoice month.
- Realisation: the 9-month realisation clock starts from the tax invoice date.
A proforma doesn't start any of these clocks. That's why exporters should never treat a proforma as "the invoice" in their records.
A worked example: advance against a proforma
Anvaya Research Pvt Ltd, a fictional Bengaluru market research firm, wins a project from a Dutch consumer brand worth EUR 24,000, with 50% payable upfront.
| Date | Document | Amount | What happens |
|---|---|---|---|
| 22-Sep-2026 | Proforma PF/26-27/07 | EUR 12,000 (50% advance) | Client's procurement raises a PO and pays |
| 06-Oct-2026 | — | EUR 12,000 received | Bank credits advance; FIRA issued |
| 06-Oct-2026 | Advance handled per GST rules | — | Anvaya's CA advises on GST treatment of the advance |
| 30-Nov-2026 | Tax invoice ARP/E/26-27/052 | EUR 24,000 | Project delivered; full value invoiced, advance adjusted |
| — | November EDF | One Part 2B row | Due 30 December 2026; remarks note "EUR 12,000 advance received 06-10-2026" |
| 15-Dec-2026 | — | EUR 12,000 balance received | Invoice fully realised |
At ₹98 per EUR, the tax invoice is worth ₹23,52,000, which is above ₹10 lakh, so Anvaya will close it in EDPMS with both FIRAs and a matching instruction.
Two points worth noticing:
- The proforma never appears in the EDF. The tax invoice does.
- The remarks column links the advance to the invoice so the bank can match both receipts. Our guide to EDF for advance payments covers timing in detail.
How GST treats an advance received for an export of services is a question for your CA; this article doesn't cover it.
Mistakes to avoid
| Mistake | Consequence | Fix |
|---|---|---|
| Using the same number series for proformas and tax invoices | Gaps or duplicates in your GST sequence | Separate series with a distinct prefix |
| Recording a proforma as a sale | Overstated revenue; wrong GST reporting | Book revenue only on the tax invoice |
| Listing a proforma on the EDF | Bank matches against a document that isn't an invoice | List only tax invoices |
| Never issuing the tax invoice after an advance | Advance sits unmatched; GST and FEMA records incomplete | Raise the tax invoice when the service is supplied |
| Changing the amount on a tax invoice instead of a proforma | Needs credit/debit notes | Negotiate on the proforma; finalise on the invoice |
This is general information, not legal or tax advice.
Frequently asked questions
Is a proforma invoice valid for GST?
No. A proforma invoice isn't a GST document and doesn't create tax liability. GST is accounted for on the tax invoice, which must meet the GST invoice rules.
Can I collect payment against a proforma invoice?
Yes. Many exporters collect advances against a proforma. When the money arrives, record it as an advance, and later raise a tax invoice that adjusts it. Ask your CA how GST applies to advances in your case.
Does a proforma invoice go on the EDF?
No. The EDF lists export invoices — tax invoices — one row per invoice in Part 2B. If an advance was received against a proforma, mention it in the remarks of the eventual tax invoice's row.
When does the 9-month realisation period start if I issued a proforma first?
It starts from the date of the tax invoice, not the proforma. The proforma doesn't start any FEMA or GST clock.
Should a proforma have its own number series?
Yes. Use a separate series, such as "PF/26-27/01", so proformas never interrupt the consecutive numbering of your tax invoices.
Bottom line
Use a proforma to agree and collect; use a tax invoice to record, report and declare. Create the first with our free proforma invoice generator and the second with the export invoice generator.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.