Proforma Invoice vs Tax Invoice vs Quotation: Key Differences
Confused between a proforma invoice, a tax invoice and a quotation? This 2026 guide explains the difference, when to use each, and how to create them free — with a proforma invoice format.
"Proforma invoice", "tax invoice" and "quotation" get used interchangeably, but they're three different documents with three different jobs. Sending the wrong one can confuse clients or create GST headaches. Here's the clear difference.
Quotation
A quotation is your offer. It's sent before the client agrees, listing scope, prices, taxes and a validity date. It carries no payment obligation — it's there to help the client decide.
Proforma invoice
A proforma invoice is a preliminary bill sent once the client has broadly agreed but before goods/services are delivered. It looks like an invoice and states the expected amount, but it is not a legal tax document — the buyer can't claim input tax credit on it, and it doesn't record a sale in your books. It's commonly used for advance payments, customs, or getting a purchase order raised.
Tax invoice
A tax invoice is the final, legal document issued when the supply happens. It carries a unique sequential number, the GST charged, and lets the buyer claim input tax credit. This is the one that matters for GST filing and your GSTR-1.
Quick comparison
- Quotation — before agreement · an offer · no tax obligation.
- Proforma invoice — after tentative agreement, before delivery · estimate of the bill · not a tax document.
- Tax invoice — at/after supply · legal document · GST + input credit.
The right order for most businesses
Send a quotation → client approves → optionally issue a proforma invoice to collect an advance or get a PO → deliver → raise the tax invoice. The good news: you shouldn't retype anything between these steps. See our quote-to-invoice workflow — Envoiz converts an approved quotation into an editable invoice in one click.
Proforma invoice format
A proforma uses almost the same layout as a tax invoice — your details, client details, line items, taxes and total — but is clearly titled "Proforma Invoice" and usually notes that it isn't a tax document. In Envoiz you can create the quote/estimate, and once confirmed, generate the final GST invoice in the correct format.