Glossary
Proforma Invoice vs Tax Invoice: What Is the Difference?
Proforma invoice explained for interior firms: definition, example, common mistakes and FAQs.
Published · Updated · By DecorFlow
Key points
Before the supply
It states the expected charge and is often used to ask for an advance.
Tax invoice later
The final document is issued under the applicable tax rules.
Matched afterwards
The final invoice should refer to the proforma it follows.
Definition
A proforma invoice is a preliminary bill that states what will be charged before the work or delivery is complete. It is used to request an advance or to confirm terms. It is generally not the final tax document; the tax invoice is issued when the supply is made, under the applicable rules.
An example
A studio sends a proforma for the first stage of a project so the client can release an advance. When the stage is complete and the payment terms are met, the studio issues the tax invoice and refers to the earlier proforma so the two can be matched.
Common mistakes
- Treating a proforma as a tax invoice in your records.
- Not referring to the proforma on the final invoice.
- Issuing both for the same amount without matching them.
- Assuming GST treatment without checking with your accountant.
Common questions
Can a client pay against a proforma?
Yes, many studios take advances against one. How the payment is treated for tax should be confirmed with your accountant.
Is a proforma a legal demand for payment?
It depends on your agreement. Ask a legal advisor how your terms treat it.
Does DecorFlow support proforma invoices?
DecorFlow can issue invoice documents as proforma, and an invoice can reference the proforma it was converted from. Check your plan for details.