Commercial Invoice vs Proforma Invoice: What Exporters Need to Know
Both documents look alike, carry the same product lines and often use the same template. But they do different jobs at different points of the deal, and mixing them up can delay customs clearance or an LC payment.
A proforma invoice is a quotation in invoice format, sent before the sale so the buyer can confirm the order, open an LC or apply for an import licence. It is not a demand for payment and is not recorded as a sale. A commercial invoice is the final bill issued when the goods are shipped. It is a legal document used by customs in both countries, by banks for payment and by you for GST reporting.
What a proforma invoice does
A proforma invoice sets out the offer in the exact form the final invoice will take. Buyers use it to get internal approval, arrange finance, open a letter of credit, or apply for an import permit in their country. Because it is an offer, you can revise it until the buyer confirms. It should carry a validity date so prices do not stay open forever.
You can create one in a few minutes with our free proforma invoice generator, with or without your logo.
What a commercial invoice does
The commercial invoice is issued when the goods are dispatched. Customs in India checks it against the shipping bill, the buyer's customs uses it to assess import duty, and banks use it to process payment under an LC or collection. For GST, an export invoice must show that it is a supply for export, either with payment of IGST or under LUT without payment of IGST.
Side-by-side comparison
| Proforma invoice | Commercial invoice | |
|---|---|---|
| When | Before the order is confirmed | When goods are shipped |
| Purpose | Offer, LC opening, import permit | Customs, payment, accounting |
| Legally binding | No, it is an offer | Yes, it records the sale |
| Can it change | Yes, until confirmed | Only through a credit or debit note |
| Recorded for GST | No | Yes |
What both invoices should contain
- Exporter and buyer names, addresses and contact details, plus your IEC and GSTIN
- Invoice number and date, and the buyer's order reference
- Clear description of goods with HS code, quantity, unit price and total value
- Currency and the Incoterm with a named place, for example "CIF Hamburg, Incoterms 2020"
- Country of origin, port of loading and port of discharge
- Payment terms and bank details
- Packing details and weights, which should match the packing list
Keep the two consistent
If the buyer opens an LC based on your proforma, the bank will check the commercial invoice against the LC wording. Any difference in description, quantity, unit price or Incoterm can be treated as a discrepancy. Copy the product description word for word from the proforma or LC into the commercial invoice. Our LC documentation guide covers the most common mismatches.
Frequently asked questions
Can I ship goods against a proforma invoice?
No. Customs clearance and bank payment need a commercial invoice. The proforma is only an offer made before the sale.
Is GST charged on a proforma invoice?
A proforma invoice is not a tax invoice, so it is not reported for GST. It can show the expected tax so the buyer knows the total.
Does a proforma invoice need a signature?
It is good practice to sign or stamp it, especially when the buyer will use it to open an LC or apply for an import licence.
Can a proforma invoice be used to receive an advance?
Yes. Many exporters request an advance payment against a confirmed proforma invoice. The commercial invoice is then issued at shipment.
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