Tax Invoice, Proforma or Quotation? Which Should You Send?
Learn when to send a quotation, proforma invoice or GST tax invoice, and how to keep customer documents clear and compliant.
A quotation offers a proposed price and terms, a proforma invoice is a preliminary payment or transaction document, and a tax invoice records a supply when GST rules require one. They serve different points in a sale. Sending the wrong document can confuse a customer or create a tax-record problem, so match the document to what has actually happened and your GST status.
How do the three documents compare?
| Document | Main purpose | Does it replace a GST tax invoice? |
|---|---|---|
| Quotation / estimate | Proposes price, scope, validity and commercial terms before the customer commits | No |
| Proforma invoice | Summarises a proposed transaction or requests an advance/payment process before final supply documentation | No, where a tax invoice is required |
| Tax invoice | Records a taxable supply and the tax particulars prescribed for the transaction | It is the tax document when applicable |
| Bill of supply | Used in prescribed cases where a tax invoice is not issued, such as relevant exempt or composition supplies | It applies to its own eligible cases |
When should a business issue each one?
Send a quotation when a buyer needs to approve scope and price. Make validity dates, quantities, taxes, shipping and payment terms clear, and say whether the stated amount includes GST. A proforma can help communicate expected charges before completion, but label it clearly as provisional and avoid presenting it as proof of a completed taxable supply.
Issue the final document required by GST law once the relevant supply or payment event occurs. CBIC’s invoice rules cover required particulars and timing, including special situations. The right treatment can vary for services, goods, advances, exports, reverse charge and other cases. Confirm the rule for your transaction rather than relying on a template.
Also readBest Free Tools Every Small Business Owner Should Use→What should you check before sending?
- Use a clear document title: quotation, proforma invoice, tax invoice or bill of supply.
- State whether prices include GST and identify assumptions or exclusions.
- Check the customer details, supply description, tax treatment and totals.
- Use a unique, controlled invoice-number series for tax invoices.
- Keep the approved quote, order, payment record and final invoice together.
H View’s GST invoice generator can help lay out invoice fields. It does not decide which document you must issue or determine GST compliance.
Frequently asked questions
Can I collect payment against a quotation?
A quotation sets out a proposed commercial offer. Payment terms and advance documentation depend on your agreement and the applicable tax rules.
Can I claim input tax credit from a proforma invoice?
A proforma is not a substitute for the tax documentation required for an eligible credit claim. Confirm the statutory conditions and records for your situation.
Can I convert a proforma into a tax invoice?
You may issue the appropriate final tax document when required, using the correct particulars and number series. Follow your accounting process and current GST rules.
This is general information, not tax or legal advice. Confirm document timing and treatment with current CBIC guidance or a qualified tax professional.
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