What Is Pro Forma Invoice Format And Status Under GST: Pro Forma is derived from Latin which means “for the sake of form” or “as a matter of form”. A pro forma invoice serves as a preliminary invoice that informs customers of the final price and authorises vendors to begin work. Pro forma invoices are generally sent before a service or a delivery of products is completed. They provide buyers with a final total cost and sellers with a more accurate estimate of future payment. In this article, let’s understand everything about the Pro Forma Invoice format under GST in detail.
- What is Pro Forma Invoice Format?
- When Pro Forma Invoice is Issued?
- What is the Purpose of a Pro Forma Invoice?
- Proforma Invoice Format
- What Information is Required on a Proforma Invoice?
- What Does a Pro Forma Invoice Look Like?
- What is the Difference Between a Pro Forma Invoice and an Invoice?
- Changes Between Pro Forma Invoice Under GST and GST Proforma Invoice
- FAQs on Pro Forma Invoice Format under GST
A pro forma invoice is a document that details the specifics of products or services that have yet to be delivered to the buyer/customer. It gives an estimate of the cost of the items or services that are offered. It also includes an estimate of any commissions, applicable taxes, the shipment’s weight, and shipping charges, among other things.
In general, an enquiring buyer/customer receives a pro forma invoice from a supplier/retailer.
Generally, before selling or provide a service, a Pro Forma invoice is generated. If a customer wants a document for goods or services that have not yet been provided, a supplier may issue a pro forma invoice. As a result, it is frequently sent prior to the tax/commercial invoice.
The amount on the final invoice will be the same as or similar to the amount on the pro forma invoice. For a smooth delivery procedure, pro forma invoices are more commonly utilised for customs purposes on imports or exports.
For example, a two-wheeler customer might agree to the price of a cycle on a pro forma invoice. When the bike is ready, the supplier will send it, and the customer will pay when the invoice is received.
The Pro Forma Invoice is issued for the following purposes:
- To estimate the sale price of items that have yet to be delivered or services that have yet to be given (estimated total cost).
- To offer the consumer an understanding of the contents to be transported, the worth of the goods, shipping time, and so on.
- Declare the supplier’s commitment to the buyer to deliver the goods or services described at the prices specified.
- Pro forma invoices are also useful when two businesses are doing business for the first time.
The specific format of a pro forma invoice is not prescribed by law, but it is given as part of acceptable business practices. A pro forma invoice may resemble a commercial invoice in appearance. It should, however, be clearly labelled “pro forma” and may additionally state, “This is not a GST invoice.” The pro forma invoice is simply an estimate, and it should not be paid until the job has been completed and the final tax invoice has been given.
Proforma invoices should include details that include ordinary invoices such as contact information, invoice issue date, a description of the products or services given, the total amount payable, and any applicable VAT. However, the following details must be present on Pro Forma Invoice template:
- Invoice number that is unique
- Date of preparation/publication
- The supplier’s address
- Prospective buyer’s address
- Description of goods or services, including unit pricing and sum for each budget item
- The pro forma invoice’s validity
- Sale terms that have been proposed
- Payment terms proposed if any
- If any “Customs Authorities” certifications are necessary,
- Signature of an authorised representative of the supplier’s company
The sample format of the Pro Forma invoice under Pre-GST laws will look like the following image.
The sample format of pro forma invoice under GST law will look like the following image:
The difference between Proforma Invoice and an Invoice is tabulated below:
Pro Forma invoice
|The term “invoice” refers to a commercial document delivered by a supplier to a customer that contains information on the goods or services that were provided to him as well as a notice that payment is required.||
A pro forma invoice is a document that provides information regarding the particulars of the goods or services yet to be delivered to the buyer/customer.
|It notifies the amount to be paid after the product or service is purchased||
It notifies the amount to be paid before the product or service is purchased
|It is issued when the product is purchased||
It is issued before the product is purchased
|When the sale is confirmed, it is issued to the customer||
When the sale is created, it is issued to the customer
The significant differences in GST pro forma invoices as compared to pre-GST invoices in pro forma are explained below:
- The GST pro forma invoice contains the GST registration number, whereas the VAT/CST/Sales Tax pro forma invoice has the VAT/CST/Sales Tax registration number.
- Additionally, the GST pro forma invoice includes information on HSN codes for commodities and SAC codes for services.
- GST is divided into three categories: SGST, CGST, and IGST, depending on whether the supply is intrastate or interstate.
Should I pay a proforma invoice?
No, you don’t have to pay the Proforma invoice. Only when the order is confirmed, the seller will issue the final invoice and the customer should pay the amount represented on the final invoice bill.
Does the proforma invoice have the number?
No, the proforma invoice doesn’t need to have a number on it.
Is it possible for a customer to negotiate over the amount specified in the pro forma invoice?
A pro forma invoice is, in fact, negotiable. A customer might negotiate about price, shipping expenses, and delivery time, among other things. Even if both customer and seller have signed it, it can be changed.