Proforma Invoice

A proforma invoice is a draft or preliminary invoice issued before the actual supply of goods. It outlines the items, quantities, unit prices, applicable taxes, and total estimated value of a proposed transaction. Crucially, a proforma invoice is not a tax invoice — it does not trigger GST liability, cannot be used to claim input tax credit, and is not reported to the e-invoicing portal. It is a commercial quotation in invoice format.

In Indian FMCG distribution, proforma invoices are commonly used when a distributor requires advance payment before dispatching high-value goods, when a retailer needs an estimate to arrange funds or seek internal approval, or when goods are being sent to a new outlet on a trial basis. They are also widely used in interstate transactions where the buyer needs to arrange an e-way bill or logistics in advance.

Within an order management workflow, a proforma invoice is generated at the order confirmation stage and converts into a final tax invoice upon dispatch. The billing system carries forward all line items and recalculates any price changes between proforma and actual invoice dates.