Invoicing
Proforma, tax invoice, bill of supply: what to send and when
Three documents get muddled in practice — the proforma, the tax invoice and the bill of supply. They look similar and are used for very different things, and sending the wrong one is the kind of mistake a firm of auditors can't afford to make on its own billing.
Here's the difference, and a simple rule for which to send.
The proforma invoice — an estimate, not a bill
A proforma invoice is a preliminary quote sent before the work is done or the supply is made. It confirms the scope and the price with the client, but it is not a legal document under GST: it creates no tax liability, demands no payment, and gives the client no input tax credit.
Its job is to get agreement up front — so the client sees the number before the work, and there's no argument at billing time.
The tax invoice — the real thing, with GST
A tax invoice is issued by a GST-registered person for a taxable supply. It carries the GSTIN, the HSN or SAC code, and the tax split — CGST plus SGST for a supply within the state, or IGST for a supply across states — and it's what lets the client claim input tax credit.
For a supply of services, the tax invoice should be issued within 30 days of the supply. This is the document that actually raises the money and the tax.
The bill of supply — when there's no GST to charge
A bill of supply is issued when GST can't be charged on the supply — for example by a taxpayer registered under the composition scheme, or for exempt supplies. It looks like an invoice but shows no GST, and the recipient can't claim input tax credit against it.
For a practice, this matters when a billing entity isn't GST-registered or the supply is exempt: the correct document is a bill of supply, not a tax invoice.
A simple rule for a practice
Send a proforma to agree the fee before the work. When the job is done, raise a tax invoice if the entity is GST-registered and the supply is taxable — or a bill of supply if it isn't. And if an issued invoice needs correcting, reverse it with a credit note rather than deleting a raised bill.
Getting this right is mechanical once the document type follows automatically from the entity's registration — which is exactly the kind of thing worth letting software decide.