What is a Proforma Invoice?

A Proforma Invoice is a document similar to an invoice regarding the particulars of the goods/services yet to be delivered to the customer, with details on prices, quantities, taxes, and other charges like delivery fees.

Why are Proforma Invoices issued?

Proforma invoices are issued before the final invoice to inform buyers about prices, quantities, additional charges, and terms/conditions. Buyers can voice any objections before the issuance of the final invoice, preventing the need for revisions.

Status under GST and other laws

Proforma invoices are not legal documents and do not require reporting under GST returns. Sellers are not obligated to pay GST on proforma invoices. It is important to differentiate proforma invoices from sales invoices to avoid legal implications under GST.

Format of Pro Forma Bill

There is no prescribed format for proforma invoices. Key information includes a unique number, date of issue, supplier and buyer addresses, description of goods/services, terms of sale, terms of payment, bank details, and relevant certifications.

Sample Proforma Invoice Format

Download sample proforma invoice formats for businesses dealing in goods or services with or without GST in Excel or Word format.

What is the difference between Invoice and Proforma Invoice?

While invoices are legal documents issued after sales, proforma invoices are estimates sent before delivery to inform buyers about goods/services, pricing, and terms. Invoices are binding documents, whereas proforma invoices serve as estimates.

How Proforma Invoice is different from Quotation?

Proforma invoices are issued towards the end of sales, whereas quotations are provided at the start. Quotations may lack detailed information and exact costs, unlike proforma invoices.

What’s the Difference between a Proforma Invoice and a Purchase Order?

The key distinction between a proforma invoice and a purchase order lies in their origins. Sellers generate proforma invoices for buyers, while buyers create and send purchase orders to sellers for payment processing.

General terms and conditions for proforma invoices

Include payment terms, warranty information, delivery/installation terms, and after-sales service details in proforma invoices. Consider including third-party warranty details if applicable, such as in the case of electronics with service centers.

FAQs

What is Proforma invoices?

Proforma invoices are issued before final invoices to inform buyers about pricing, quantities, additional charges, and terms to prevent any objections post-invoicing.

What is the difference between a proforma invoice and an invoice?

Invoices are issued after sales, while proforma invoices precede sales to inform buyers about goods, pricing, charges, and sales terms.

What is the format of proforma invoice under GST?

Proforma invoices fall outside GST boundaries, exempt from GST payments, and lack specific formats under GST laws.

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