A proforma invoice is a preliminary document issued by a supplier before goods or services are supplied, setting out the description, quantity, price, taxes and terms of a proposed sale. It is not a tax invoice under Section 31 of the CGST Act, does not record a supply, cannot be used by the buyer to claim input tax credit, and does not by itself create an enforceable debt. It becomes relevant to recovery when the buyer accepts it (for example by paying an advance or issuing a PO against it), which evidences the agreed terms.
How proforma invoices work in India
A buyer asks for a proforma to raise a PO, arrange finance, or release an advance. The supplier issues it marked "Proforma Invoice", usually with a validity period. If the buyer pays an advance against it, that is acceptance of the terms, and GST becomes payable on the advance for services (and for goods in some cases). When the goods are supplied, the supplier issues the tax invoice under Section 31 and Rule 46 of the CGST Rules, adjusting the advance. The proforma then serves as evidence of the agreed price and terms if a dispute arises.
Why it matters for getting paid
Suppliers sometimes send a legal notice on a proforma, which a buyer can brush aside as a mere quotation. The claim must rest on the tax invoice, the purchase order and delivery proof. The proforma is useful background: it shows the buyer knew and accepted the price. For advances paid against a proforma where the supplier later fails to supply, the roles reverse and the buyer may recover the advance.
How FundRaksha uses it
FundRaksha's advocates use the proforma and the buyer's acceptance of it (advance, PO or email) to prove the agreed terms, while founding the claim on the tax invoice and delivery documents. Clients are advised on the right sequence of documents at the free consultation. Fee: 30% of what is recovered; 700+ businesses paid so far.
Worked example (hypothetical)
A Rajkot machinery maker issues a proforma for a ₹20,00,000 machine (plus GST), 30% advance, balance 30 days after installation. The buyer pays ₹6,00,000 advance against the proforma and issues a PO. The machine is supplied and a tax invoice for ₹20,00,000 plus GST is raised, adjusting the advance; installation is signed off on 1 May. The balance of ₹14,00,000 plus GST is due on 31 May. When it is unpaid in October, the notice relies on the PO, tax invoice and installation report, and uses the proforma and advance payment to show the buyer agreed the price and terms. Interest is claimed from 31 May.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.