| Proforma invoice | Tax invoice | |
|---|---|---|
| What it is | A preliminary bill or quotation | The final bill for a supply |
| When | Before the goods ship or the work is done | When, or after, the supply happens |
| Demand for payment? | No, though it is often used to ask for an advance | Yes |
| Recorded in your books? | No | Yes |
| Input tax credit | Not available | Available to a registered buyer |
| Numbering | A separate series, such as PI-001 | Your main consecutive series |
When to use a proforma invoice
- The customer needs a firm price to approve a purchase order
- You want an advance before you start or ship
- An importer needs it for a letter of credit, an import licence or customs
- The final quantity or weight isn't known yet
Does a proforma invoice need GST or VAT?
It should show the tax the customer will pay, so they know the full cost. But because it isn't a tax invoice, issuing it doesn't create a tax liability on its own, and the buyer can't claim credit on it. If you receive an advance, the tax rules for advances apply, so ask your accountant how to handle them.
From proforma to tax invoice
When the supply happens, issue a tax invoice with the next number in your main series. In InvoiceDesk, open the proforma, click Duplicate, change the title to TAX INVOICE and the number, then record the advance as a payment so the balance is right. Try the proforma invoice generator.
This guide is general information, not legal or tax advice. Rules change, so check with your accountant or the tax authority for your situation.
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