A customer asks for a price, agrees, pays an advance and receives goods. Three different documents can be involved. Using the wrong one causes tax and payment confusion.
At a glance
| Quotation | Proforma invoice | Tax invoice | |
|---|---|---|---|
| Purpose | Offer a price | Preview of the final bill, often to request advance payment | Record the actual supply and tax |
| Legally binding sale | No (an offer) | No | Yes |
| Creates GST liability | No | No | Yes |
| Buyer can claim input tax credit | No | No | Yes |
| Appears in GST returns | No | No | Yes |
Quotation
A quotation lists what you will supply, at what price and under what terms, and how long the offer is valid. The customer can compare it with others. It is not a demand for payment.
Proforma invoice
A proforma invoice looks like an invoice but is not one. It is useful when the customer needs a document for approval, a bank, import formalities, or to make an advance payment. It should be clearly marked as proforma, and should never be used to claim credit.
Tax invoice
The tax invoice is issued when the supply happens (see when to issue an invoice). It is the document that creates the tax liability and that the buyer uses to claim input tax credit.
From quote to invoice without retyping
In Rashtra Bill you create a quotation or proforma, send the PDF, and when the customer accepts you convert it into a tax invoice with a click. Items, rates and GST come across, so nothing is typed twice.
Frequently asked questions
Can I collect an advance against a quotation?
You can request an advance against a proforma invoice. GST on advances is a separate topic with its own rules and a receipt voucher may be needed, so check with your CA.
Do I need to put a GSTIN on a quotation?
It is good practice to show your GSTIN, but a quotation is not a tax document and the Rule 46 list does not apply to it.
This guide is general information for small businesses, not legal or tax advice. GST rules, rates and thresholds are changed by notification, so check the current position on the GST portal or with your chartered accountant before acting.