Proforma Tax Invoice: the rules, and the document people confuse it with

Proforma Tax Invoice: the rules, and the document people confuse it withA plain explanation of proforma tax invoice — what it is for, who issues it, what goes on it, and what happens if the wrong one is used.

What every one of them has in common

Whichever document it is, three things apply. It needs a consecutive serial number unique within the financial year, of not more than sixteen characters and using only letters, numbers, hyphens and slashes. It needs identifying content for both parties. And it has to be retained for the prescribed period, which is counted from the due date of the annual return rather than from the date on the document.

Each document type also needs its own series. A proforma numbered in your tax invoice series is a genuine problem, because it consumes a number from a series that has to be consecutive and complete.

Rates, turnover thresholds, e-invoicing applicability and the time limits for issuing all change. Nothing on this page states one as a current fact — check the notification in force for your own circumstances.

The proforma: an offer, not a tax document

A proforma is what it will cost, set out in the shape of an invoice so the buyer can see the lines and the tax treatment before committing. It is sent before the supply, usually to get a purchase order raised or an advance released.

Because it is not a tax invoice, three things follow and all of them are commonly ignored. It must not be numbered in your tax invoice series. It creates no tax liability on its own. And nobody can claim input credit against it, so a customer who files it as a purchase invoice has made an error that will surface in their reconciliation.

Label it unambiguously — "Proforma Invoice" or "Quotation" — and keep it in its own series, something like PI/25-26/001. When the supply happens, raise the real tax invoice carrying the same lines across so the figures cannot drift between the two documents.

If an advance is actually received against a proforma, that money has its own prescribed document: a receipt voucher, with its own timing for tax. The proforma does not cover it.

Issuing these properly, free

Tax invoices with the complete prescribed field set, tax split per line.
Bills of supply for exempt and composition supplies, with no tax line.
Proformas and quotations in their own series, converting to an invoice without retyping.
Credit and debit notes that reference the original invoice rather than editing it.
Separate consecutive series per document type, issued centrally so a number cannot repeat.
Tax derived from the place of supply, so CGST/SGST against IGST is never a judgement call.
A receivables position — what is unpaid, how old, and whose.
Export of everything to CSV, Excel and JSON, on every plan.
₹0 on the free plan, no card, no expiry.

Setting up your document series

Start free now — email and password, no card.
Enter your business name, address and GSTIN once.
Set the next number for your tax invoice series, carrying on from whatever you last issued.
Give proformas and quotations their own prefix, so they can never consume an invoice number.
Do the same for credit notes and for bills of supply if you make exempt supplies.
Add your customers with their GSTINs, and your items with HSN or SAC codes and rates.
Raise one of each document you actually use, and check the numbering behaved as you expected.

Keeping the documents for as long as you have to

Invoices and the records behind them must be retained for a prescribed period counted from the due date of the annual return for that year, not from the date on the document — so the obligation runs considerably longer than most people assume. Check the period currently in force for your own case.

That has a practical consequence. A laptop, a phone and a folder of PDFs are not a retention plan, because the horizon outlasts most hardware and most staff. Where records are kept electronically they have to stay accessible and readable for the whole period, which means a format you can still open and a copy somewhere other than the machine that produced it.

It is also worth keeping them in a form that can be searched and totalled, not only read. When records are actually asked for, the request is rarely "send me invoice 412" — it is a period, a customer or a figure that has to be reconciled.

Dull, cheap to do, and expensive to reconstruct. Those three things together are why it is worth doing now rather than later.

The numbering series, which is where most of this goes wrong

The rule is short: a consecutive serial number, unique within the financial year, not more than sixteen characters, made only of letters, numbers, hyphens and slashes. One series, or clearly separated series where you genuinely need more than one — each consecutive in itself.

A file cannot enforce any part of that. The number is typed, which means it can be repeated, skipped, or quietly rolled back when yesterday's invoice is edited into today's. Nothing notices.

The half that is forgotten is cancellation. A cancelled invoice keeps its number and stays in the series as cancelled. Deleting the row and reusing the number leaves a gap in your books and a figure in your customer's, and reconciling those two is a long afternoon with a bad outcome.

Separate series per document type is the other discipline. Proformas, credit notes and bills of supply each need their own, and mixing them is how a tax invoice series ends up with holes in it.

Invoice numbering: one unbroken series per year

The invoice number has to be consecutive, unique within the financial year, and no more than sixteen characters of letters, numbers, slashes and hyphens. Gaps invite questions. Duplicates cause them.

This is the single most common reason a spreadsheet-based billing setup fails an audit: two people billing on two machines, both starting from the last number they remember. A system that issues the number centrally cannot make that mistake.

The series restarts on 1 April, and Billixo restarts it for you rather than waiting to be told.

Credit notes, debit notes, and fixing a wrong invoice

An issued tax invoice is not something to edit. If the value was too high, or goods came back, the correction is a credit note that references the original invoice. If it was too low, a debit note. Both carry their own numbers and both appear in your return.

There is a deadline on the credit note that matters: the adjustment has to be declared by the return for the relevant month of the following financial year, or by the annual return, whichever comes first. Past that, the note exists commercially but the tax cannot be adjusted.

Software that lets you quietly retype an invoice raised last month is not doing you a favour.

Bill scanning, in practice

The single largest time cost in most small businesses is not raising invoices — it is entering purchases. A photograph of a supplier bill goes in and a structured draft comes out: supplier, GSTIN, line items, rates, tax split and total.

You check it. That is the workflow, and it is deliberate: an extraction you did not read is a liability, not a saving. But checking a filled form takes fifteen seconds and typing one takes three minutes, and that difference compounds over a month of purchases.

Who it is built for

Small and mid-sized Indian businesses that are registered under GST and bill regularly. One person doing everything, or a counter with three people billing at once and an accountant who needs the month to close cleanly.

The design assumption throughout is that whoever raises the invoice is busy and is not a tax specialist. So the tax is computed rather than asked for, the compliance fields are populated rather than presented as questions, and the report the accountant wants is a download rather than a request.

Try it free — the free plan needs no card and does not expire.

What "free" means here, exactly

The Free plan costs nothing, needs no card, and has no expiry date. It is not a trial that turns into a bill; it is a plan you can run a small business on indefinitely.

What it gives you:

Real GST invoices with the full Rule 46 field set
Customers and products, with HSN/SAC held against each
A daily and monthly invoice allowance, generous enough for a small operation
One login
Export of your own data, whenever you want it

What it does not give you:

A watermark-free PDF
GSTR-1 and GSTR-3B export
The AI features — bill scanning, HSN lookup, the assistant
Extra team logins, bulk import, recurring invoices and reminders

Every new account also gets the full paid feature set for its first 14 days, so you can see what the ceiling looks like before deciding whether you need it. When that ends nothing is charged and nothing is deleted — the account simply settles onto Free.

Start free now — it takes an email address and about a minute.

Reliability, backups and getting your data out

Cloud billing software is only as good as its worst day. Two things matter more than any feature list: that your data is backed up somewhere you can reach, and that you can export it in a format something else can read.

Exports here are CSV, Excel and JSON, on every plan including the free one, covering customers, products, invoices and payments. That is the honest test of whether software respects you — not what it promises, but what it lets you take when you leave.

Frequently asked questions

What is the difference between a tax invoice and a bill of supply?

A tax invoice is issued on a taxable supply and shows the tax separately, so the recipient can claim input credit. A bill of supply is issued where no tax is being charged — an exempt supply, or a composition dealer — and must not show a tax amount at all. Issuing the wrong one is a compliance error rather than a presentation choice.

Is a proforma invoice a legal invoice?

No. It is a quoted offer laid out like an invoice. It creates no tax liability, supports no input credit claim, and must not be numbered in your tax invoice series. The real tax invoice is raised when the supply actually happens.

Can I edit an invoice after issuing it?

No. Once it has gone to the customer you issue a credit note or a debit note referencing the original. Editing the original leaves two versions of one invoice number in two sets of books, and the mismatch surfaces at reconciliation — usually in the following month.

Will my accountant be able to work with it?

That is what the GSTR-1 and GSTR-3B summaries are for. They export in formats a practitioner can open and reconcile without repairing the file first — which, in practice, is most of what a CA wants from a client’s billing software.

What happens to my data if I stop paying?

Nothing is deleted. The account settles back onto the Free plan: the paid conveniences switch off, the volume limits return, and every invoice, customer and product you created stays exactly where it is — including the export.

Try it — the demo is the product

There is no sales call and no scheduled demo, because a recorded walkthrough of somebody else’s data tells you nothing about your own. Open an account instead and raise a real invoice for a real customer; it takes about a minute and costs nothing.

Open the software demo → — sign in, or create a free account from the same screen.

See full details on the home page → — features, the AI, pricing and the answers to the usual questions.