Quick answer: A proforma invoice (also written pro forma invoice, or PI) is a preliminary bill sent before goods or services are delivered. It shows what the final invoice will contain, but it is not a request for payment under GST and cannot be used to claim input tax credit.
Proforma invoice definition
The phrase comes from the Latin pro forma, "as a matter of form". You will also see it called a pre invoice, pro forma bill, proforma of invoice, or the misspelling "performa invoice". They all mean the same document.
When to use a proforma invoice
- Advance payment: the buyer needs a document to release prepayment.
- Export and import: customs, banks and letters of credit often ask for an export proforma invoice.
- Order approval: a buyer needs a bill-style document for internal sign-off.
- Made-to-order work: the final cost depends on confirmed specifications.
What a proforma invoice includes
Seller and buyer details, a "Proforma Invoice" title, reference number and date, item descriptions with HSN/SAC codes, quantity and unit price, estimated taxes, shipping and payment terms, bank details, and a validity date.
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Frequently asked questions
What is the meaning of proforma invoice?
A preliminary bill sent before delivery, stating expected price, quantity and terms. It is not a demand for payment.
What is the full form of PI in invoice?
PI means proforma invoice.
Is a proforma invoice legally binding?
Usually no. It becomes binding only when the buyer accepts it and both sides treat it as a contract.
Is a proforma invoice the same as a quotation?
No. A quotation offers a price. A proforma invoice is bill-style and used for advance payment, customs or approvals.
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