Business Software
What a quotation, an estimate, a proforma invoice and a GST tax invoice each do, when to issue which, and why only a tax invoice lets your customer claim input tax credit.
Checked against current rules for Tax invoice as the document for a taxable supply under Section 31 of the CGST Act and Rule 46 of the CGST Rules; proforma invoice and quotation not being tax invoices on 29 September 2026. Source: CBIC — Section 31, CGST Act, 2017 and Rule 46, CGST Rules, 2017 (as amended).
Businesses often use "quote", "estimate", "proforma" and "invoice" as if they meant the same thing. They do not. Each one sits at a different point in a sale and carries a different meaning — and only one of them is a tax document under GST. Mixing them up leads to customers who cannot claim tax credit, sales that are not properly recorded, and disputes over what was actually agreed.
This article explains how these documents are generally used. It is not tax or legal advice for your specific transaction — check the current CBIC rules or a tax professional for an unusual case.
A quotation is a formal price offer you send before the customer has decided to buy. It lists what you will supply, the price, the applicable tax, the terms and how long the offer stays valid. It is the document customers compare against your competitors, so it should be clear, complete and easy to accept. Send one with the free quotation generator.
An estimate is an approximate cost, used when the final quantity or effort is not yet known — repair work, projects or anything priced on time and materials. Unlike a quotation, it signals that the final amount may move. The free estimate generator helps you set that expectation in writing, and estimate vs quotation looks at the two documents in more detail.
A proforma invoice is a preliminary invoice-style document sent once the customer has agreed to buy but before the goods or services are delivered. It confirms exact items, amounts and terms, and is commonly used to request an advance payment, support an import or export, or help a customer raise an internal purchase order. It looks like an invoice, but it is not one. The free proforma invoice generator produces a clearly marked proforma.
A tax invoice is the document a GST-registered supplier issues for a taxable supply under Section 31 of the CGST Act, with the particulars listed in Rule 46 of the CGST Rules. It records the sale, is what you report in your returns, and is the document your customer relies on to claim input tax credit. See for the full list.
Free Quotation Generator
Create a professional quotation online for free — propose a price for goods or services, with or without GST, then preview, print or download it as a PDF.
What is the difference between a quotation and a proforma invoice?
A quotation is a price offer sent before the customer decides to buy. A proforma invoice is sent after the customer has agreed in principle, to confirm the exact items, amounts and terms — often so they can arrange payment or paperwork. Neither is a tax invoice.
Is a proforma invoice a valid GST invoice?
No. A proforma invoice is not the tax invoice required for a taxable supply under Section 31 of the CGST Act and Rule 46 of the CGST Rules. It does not record a sale, and your customer cannot claim input tax credit on it.
Can a customer claim input tax credit on a quotation or proforma invoice?
No. Input tax credit is claimed on a valid tax invoice (or debit note). Once the supply is made, issue a proper GST tax invoice so the customer has the document they need.
What is the difference between a quotation and an estimate?
In everyday use, a quotation is a firm price you are prepared to supply at for a stated period, while an estimate is an approximate figure that can change once the actual work or quantity is known. The words are used loosely, so state clearly on the document which one you mean.
When should I issue the final tax invoice?
When the supply is made, in line with the time-of-supply rules that apply to your goods or services. Confirm the exact timing for your case with the current CBIC rules or a tax professional.
Free Proforma Invoice Generator
Create a professional proforma invoice online for free — a preliminary commercial document with optional GST estimate, then preview, print or download it as a PDF.
Free Estimate Generator
Create a professional estimate online for free — communicate expected pricing to a customer before work begins, with optional discount and GST or custom tax, then preview, print or download it as a PDF.
GST & Tax
Quotation Format and Sample: How to Create a Professional Business Quotation
What a business quotation should include, a ready-to-follow format, a worked sample with GST, and the mistakes that cost businesses money — plus a free generator to build yours.
GST & Tax
Estimate vs Quotation: What's the Difference and When to Use Each?
How an estimate differs from a quotation, how both differ from a proforma invoice and a GST tax invoice, and which document to send at each stage of a sale.
| Aspect | Quotation | Estimate | Proforma invoice | Tax invoice |
|---|---|---|---|---|
| When it is sent | Before the customer decides | Before final scope is known | After agreement, before delivery | On making the supply |
| Firmness of price | Firm for a stated period | Approximate | Confirmed | Final |
| Records a sale | No | No | No | Yes |
| Customer can claim input tax credit | No | No | No | Yes |
| Governed by Rule 46 particulars | No | No | No | Yes |
Keeping the same customer, item and price details flowing from one document to the next avoids retyping errors. A free purchase order generator and delivery challan generator cover the steps in between, and the purchase order guide explains the buyer's side. For the movement step, see delivery challan vs invoice.
You quote ₹1,00,000 plus GST for a website project. The customer agrees and asks for a proforma invoice to release an advance. You send the proforma showing ₹1,00,000 plus GST, marked clearly as a proforma. The customer pays. When you deliver the work, you issue a GST tax invoice for the supply. That tax invoice — not the quotation or the proforma — is what the customer uses to claim input tax credit and what you record as the sale.
If the customer is still deciding, send a quotation. If the price may change, send an estimate. If they have agreed and need something before delivery, send a proforma. When the supply is made, send the GST tax invoice. Working out the price behind any of them is easier once you know your margin and your sales targets.
Free GST Invoice Generator
Create a professional GST invoice online for free, with automatic CGST, SGST and IGST calculations.