Proforma invoice vs tax invoice vs quotation: what is the difference?

A quotation is a price offer, a proforma invoice is a good-faith preview of a sale, and a tax invoice is the real, legally binding document that creates your GST liability. They look similar, but only the tax invoice counts for GST — mixing them up is a common and avoidable mistake.

Quotation: "here is my price"

A quotation (or estimate) is what you send before a deal is agreed. It sets out the goods or services and the price so the customer can decide. It is not a demand for payment and has no GST consequence — it is a sales document, not an accounting one.

You can revise a quotation freely until the customer accepts it.

Proforma invoice: "here is what the invoice will look like"

A proforma invoice is issued after interest is confirmed but before the actual supply. It previews the final invoice — line items, quantities, and the expected tax — so the buyer can arrange payment, an advance, or internal approvals.

Key point: a proforma invoice is not a tax invoice. It does not create a GST liability, it is not recorded as a sale, and your buyer cannot claim input tax credit on it. Think of it as a formal "this is what you will be billed."

Tax invoice: the real thing

The tax invoice is the legally recognised document for a taxable supply under GST. Issuing it:

• creates your output GST liability,
• lets your buyer claim input tax credit, and
• must follow the prescribed GST invoice format with all mandatory fields.

This is the document that flows into your GST returns.

Quick comparison

Document	Purpose	Creates GST liability?	Buyer can claim ITC?
Quotation	Offer a price	No	No
Proforma invoice	Preview the sale	No	No
Tax invoice	Bill a taxable supply	Yes	Yes

A typical flow

1. Send a quotation to win the work.
2. On confirmation, send a proforma invoice so the customer can pay an advance or approve.
3. On supply, issue the tax invoice — the compliant, final document.

Good billing software lets you move through these in one click. In Invoicify, you can send a quotation or proforma and convert it to a GST tax invoice without re-typing anything — handy for consultants and service businesses who quote before they bill.

Remember the one line that matters: only the tax invoice is "real" for GST. The other two help you get there.