A preliminary invoice sent to a buyer before the actual supply of goods or services, showing the estimated costs, terms, and conditions of the proposed transaction.
A Pro Forma Invoice is a quotation in invoice format — it's not a demand for payment but an estimate and commitment of what will be charged. It serves as: a formal price quotation, documentation for import/export clearance, basis for opening a letter of credit, advance payment request document, and customs valuation reference. Unlike a tax invoice, a pro forma invoice does not create a legal obligation to pay and is not recorded in accounts. It becomes a commercial/tax invoice only when the actual supply occurs. In international trade, pro forma invoices are essential for customs clearance, foreign exchange allocation, and import license applications. The format is similar to a regular invoice but clearly marked 'PRO FORMA' and includes validity period, delivery terms (Incoterms), and payment terms.
Pro Forma Invoice #PFI-2026-089: From ABC Exports, India to XYZ Imports, Dubai. 1,000 units Widget-Pro @ $12.50 = $12,500. FOB Chennai. Packaging: $300. Insurance: $200. Total: $13,000. Payment: 100% advance TT. Validity: 30 days. Delivery: 45 days from payment. Buyer uses this to open LC with their bank and obtain import clearance.
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No, it's not a legal demand for payment or a binding contract. However, it represents a good-faith commitment by the seller to supply at the stated terms within the validity period. If the buyer opens an LC or makes advance payment based on it, a moral (and potentially legal) obligation arises.
No, pro forma invoices are not valid for GST purposes. GST Input Tax Credit can only be claimed against a proper Tax Invoice as defined under Section 31 of the CGST Act. A pro forma invoice is a pre-sale document and does not attract GST liability.
A commercial document issued by a seller to a buyer, detailing the products or services provided, quantities, prices, and payment terms.
A legal document issued by a registered GST dealer to a buyer showing the details of goods/services supplied, their value, and the applicable GST charged.
A formal document issued by a buyer to a seller specifying the types, quantities, prices, and terms of products or services to be purchased.
A written guarantee from a bank (on behalf of the buyer) promising payment to the seller upon presentation of specified documents proving shipment of goods.
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