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Many types of different documents are issued when a sale of goods and services takes place. Issuance of the tax invoice is compulsory for an individual who is supplying goods or services as per section 31 of the Central Goods and Services Tax Act of 2017. The concept of a Proforma invoice is not new to the system. The concept was in existence before the GST system was implemented. There were a few changes made in the Proforma invoice after the implementation of GST. The Proforma invoice contains particulars about SAC codes and HSN codes; both these codes are used for services and goods. The tax rates are classified on the basis of CGST, IGST, and SGST; the Proforma invoice also gives information about the same.
A document that consists of the particulars of the goods and services which are not delivered is referred to as a Proforma invoice. This document is similar to an invoice but is not an invoice. Proforma is a Latin term which means “for the sake of form”. A Proforma invoice acts as a formal statement which consists of the price of the goods and services; these prices can be estimated price which can be renegotiated, or revoked. The Proforma invoice is an initial invoice which takes place before the delivery of goods or services. The Proforma invoice is issued to a buyer or customer who is enquiring about the goods or services by the seller.
The concept of a Proforma invoice is not described anywhere in GST law. There is no mention of a Proforma invoice in the law relating to the Goods and services act. A proforma is not a legal document, as it is not an actual invoice. There is no mention of any term like a proforma invoice in GST rules and regulations. CST/VAT/Sales Tax registration numbers were earlier mentioned in the proforma invoice; after the implementation of GST, it is mandatory to mention the GST number. The HSN and SAG codes are now included in the proforma invoice.
When a customer asks for a proforma invoice in order to get an idea about the estimated price and the description of the goods that are to be dispatched, the supplier issues a proforma invoice for the same. This type of invoice is often used during export transactions. The proforma invoice can act as a draft of the final invoice or a copy of a sales invoice. A clear idea of the terms and conditions of the sale transaction can be provided by the proforma invoice. When the sale is going to take place between two parties residing in different countries, this type of invoice can be sent to the buyer aboard before the sale. Sometimes this invoice is also used to release the goods at the port.
In conclusion, a proforma invoice is a very useful instrument which is used in business transactions, as it gives information about the goods and services that are going to be sold before they are delivered. This invoice helps the transactions to run smoothly and gives space for negotiation as well.
There is no actual mention of a proforma invoice in the GST regime. A document that consists of the particulars of the goods and services which are not delivered is referred to as a Proforma invoice.
A Proforma invoice is not a commercial invoice. It just resembles a commercial invoice.
No, a proforma invoice is not a proper invoice. A proper invoice is issued after the delivery of goods and completion of the sale transaction.
Yes, the proforma invoice should have a GST number on it.
The regular invoice is given only after the sale has taken place, and the goods or services are delivered. The proforma invoice is issued before the actual sale has taken place.
It is not compulsory to issue a proforma invoice, but a seller can issue a proforma invoice if asked or for international shipments.
The seller is the person who will prepare the proforma invoice.
The GST is not mandatory in proforma invoice.
No, a proforma invoice is not a legal document in India.
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