Whether you are a small manufacturer in India, a trader, or an exporter, one document you will often come across is the Proforma Invoice.
It is not a tax invoice, but it is the first formal step toward confirming a business deal. Let us understand its meaning, purpose, and how to use it effectively in both domestic and export transactions.

You may also like to read: Understanding Export Proforma Invoice: Format, Meaning, and Its Crucial Role in Export Business

What is a Proforma Invoice?

A Proforma Invoice is a preliminary or estimated bill issued by a seller to a buyer before goods or services are delivered.

It outlines the product details, quantity, price, payment terms, and delivery conditions, giving the buyer a clear view of the deal before finalizing the purchase.

In simple terms, it is a quotation in legal format — showing what the final invoice will look like once the order is confirmed.

Proforma Invoice for Domestic Transactions

When both the buyer and seller are in India, it is known as a Domestic Proforma Invoice.

Purpose

• Serves as an official price quotation before generating a GST invoice.
• Helps buyers arrange advance payment or internal approvals.
• Acts as proof of offer in case of negotiations or purchase orders.

Key Elements

• Seller and Buyer details (with GSTIN)
• Proforma Invoice number and date
• Product description, quantity, and rate
• Applicable GST (CGST, SGST, IGST)
• Freight, delivery terms, and payment conditions

Example of a Domestic Invoice

ABC MANUFACTURING PVT. LTD.
GSTIN: 27ABCDE1234F1Z5
Plot No. 45, MIDC Industrial Area, Pune - 411019

--------------------------------------------------------------
                  PROFORMA INVOICE
--------------------------------------------------------------

Proforma Invoice No: PI/2025/045
Date: 23-Oct-2025

To,
M/s. Bright Traders, New Delhi - 110005

Description             Qty     Rate      Amount
LED Bulb 9W             500     Rs.80     Rs.40,000
Freight Charges                             Rs.1,000
--------------------------------------------------------------
Sub Total: Rs.41,000
CGST 9%: Rs.3,690
SGST 9%: Rs.3,690
--------------------------------------------------------------
Total Amount (INR): Rs.48,380

Payment Terms: 50 percent Advance, Balance before Dispatch
Delivery: Within 7 days after advance payment
Mode of Transport: By Road

Proforma Invoice for Export Transactions

When selling to foreign buyers, you will use an Export Proforma Invoice.
It is an essential document in international trade — required for customs, banks, and logistics.

Purpose

• Helps the buyer confirm product specifications and pricing.
• Used for obtaining import permits, Letter of Credit, and foreign exchange approval.
• Forms the basis for the Commercial Invoice, Packing List, and Shipping Bill later.

Key Elements

• Exporter and Buyer details (with IEC code)
• HS Code of goods
• Port of loading and destination
• Incoterms (FOB, CIF, etc.)
• Currency (USD, EUR, etc.)
• Payment terms (Advance, LC, DP, etc.)

Example of an Export Proforma Invoice

ABC EXPORTS
IEC No: 0891234567 | GSTIN: 27ABCDE1234F1Z5
Export House No. 12, Textile Park, Surat, India

--------------------------------------------------------------
                    EXPORT PROFORMA INVOICE
--------------------------------------------------------------

Proforma Invoice No: EXP/2025/122
Date: 23-Oct-2025

Exporter: ABC Exports, Surat, India
Buyer: BrightWear Ltd., London, UK

Description     HS Code   Qty   Unit Price   Amount (USD)
Cotton T-Shirts 610910    5000     3.50       17,500.00
--------------------------------------------------------------
Total FOB Value: USD 17,500.00

Port of Loading: Nhava Sheva, India
Port of Discharge: London, UK
Incoterms: FOB Mumbai
Payment Terms: 50 percent Advance, Balance through LC

Importance of Proforma Invoice

Limitations of a Proforma Invoices

• It is not a legal invoice and cannot be used for tax or accounting.
• No input tax credit (ITC) can be claimed on it.
• Does not guarantee payment — buyer must still confirm.
• Prices and terms can change until the final invoice is issued.

Download Free Proforma Invoices Templates

To make your business documentation easier, BusinessZindagi offers ready-to-use templates for Domestic and Export Proforma Invoices in both Excel and PDF formats.

• Download Excel Format (with Auto Calculations):
  Proforma Invoice Templates – Excel
• Download PDF Format (Printable Version):
  Proforma Invoice Templates – PDF

Tip: Use the Excel version for digital records and automatic tax totals. Use the PDF version for sharing or printing.

Frequently Asked Questions (FAQ)

1. What is a Proforma Invoice used for?
It is used to show the buyer an estimated cost before confirming the order — especially in export trade or advance payment deals.

2. Can I use a Proforma Invoices for GST filing?
No. It is not a tax invoice and cannot be used for GST or claiming input tax credit.

3. What is the difference between a Proforma Invoice and a Commercial Invoice?
A Proforma is an offer, while a Commercial Invoice is a final legal document used for payment and shipment.

4. Is a Proforma Invoice mandatory for exports from India?
Yes. It is the first document in any export process before a commercial invoice or packing list is made.

References and Useful Links

• DGFT (Directorate General of Foreign Trade): https://www.dgft.gov.in/
• CBIC – Central Board of Indirect Taxes and Customs: https://www.cbic.gov.in/
• Export Promotion Council of India: https://www.epcindia.org/
• MSME Ministry, Government of India: https://msme.gov.in/
• Startup India Official Portal: https://www.startupindia.gov.in/