Proforma Invoice vs Tax Invoice vs Delivery Challan: What Each One Is and When to Use It
OnlineBillGenerator Editorial Team8 min readLast updated 9 Sept 2026
Three documents that look alike but do very different jobs. This guide sets a proforma invoice, a tax invoice and a delivery challan side by side, shows which one creates a GST liability, and explains the order they are issued in a single sale.
Quick answer
A proforma invoice is a preliminary bill sent before a sale to confirm what will be supplied and at what price. A tax invoice is the real bill raised on or after supply, and it is the document that creates the GST liability and the buyer's input tax credit. A delivery challan travels with goods when they move but no sale is happening, for example job work or a stock transfer.
Put simply: a proforma proposes, a tax invoice charges, and a delivery challan moves. In a single order you can end up issuing all three.
The documents at a glance
The table below sets the four business documents most often confused with each other side by side. Only the tax invoice creates a GST liability and gives the buyer input credit.
| Quotation | Proforma invoice | Delivery challan | Tax invoice | |
|---|---|---|---|---|
| What it does | Offers a price to negotiate | Confirms agreed terms before supply | Records movement of goods without a sale | Records the completed sale |
| Creates a sale | No | No | No | Yes |
| Creates GST liability | No | No | No | Yes |
| Gives buyer input credit | No | No | No | Yes |
| When issued | Before an order | After terms agreed, before supply | When goods move without supply | On or after supply |
| Typical trigger | Enquiry | Advance, PO or export | Job work, transfer, approval | Delivery of goods or service |
| Make it here | Quotation | Proforma invoice | Delivery challan | Tax invoice |
What is a proforma invoice?
A proforma invoice is a document a seller sends a buyer before the sale is final. It looks like the final invoice but carries no obligation to pay and does not record a completed transaction, so no GST becomes payable on it.
Buyers use it to approve an order, raise a purchase order, release an advance, or open a letter of credit for an import. You can create one with the proforma invoice generator, which includes a validity date and a currency selector for export deals.
What is a tax invoice?
A tax invoice is the legally binding bill a GST-registered seller issues on or after supplying goods or services. It is the only document in this list that creates the GST liability for the seller and the input tax credit for the buyer, which is why the format is prescribed under the GST rules.
For a compliant tax invoice with CGST, SGST and IGST handled correctly, use the GST invoice generator. For the full field-by-field format, see our GST invoice format guide.
What is a delivery challan?
A delivery challan accompanies goods when they move but no tax invoice is being raised. Under CGST Rule 55 it is permitted for job work, supply on approval, movement where the quantity is not yet known, and other cases where ownership has not changed hands.
It is not a bill, so it does not create a sale or a tax liability. You can make a Rule 55 compliant one, including the original, duplicate and triplicate copies, with the delivery challan generator.
How they fit together in one order
In a typical B2B deal these documents appear in sequence, each doing its own job:
- The buyer asks for a price, so you send a quotation.
- Terms are agreed, so you send a proforma invoice so the buyer can raise a PO or pay an advance.
- You ship the goods; if they move before the sale is billed, or for job work, they travel on a delivery challan.
- On supply you raise the tax invoice, which finally creates the GST liability and lets the buyer claim input credit.
The GST point that trips people up
Only the tax invoice matters for GST. Tax can be shown on a proforma invoice or a delivery challan for information, but it does not become payable and the buyer cannot claim credit against either. Raising a delivery challan does not let you skip the tax invoice, and paying against a proforma does not remove the need to issue one on supply.
If you are still unsure which document you are holding, our guide on the difference between a bill, an invoice and a receipt covers the everyday terms too.
Frequently asked questions
What is the difference between a proforma invoice and a tax invoice?
A proforma invoice is an estimate sent before the sale is confirmed and creates no tax liability. A tax invoice is issued on or after supply, is legally binding, and is the document that creates the GST liability and the buyer's input tax credit.
What is the difference between a delivery challan and an invoice?
A delivery challan only records the movement of goods and creates no sale or tax. An invoice records the completed sale and, if it is a tax invoice, creates the GST liability. The same goods can move on a challan and be billed later with a tax invoice.
Is a proforma invoice the same as a delivery challan?
No. A proforma invoice is a pre-sale price document sent to the buyer. A delivery challan physically travels with goods when they move without a sale. They serve completely different purposes and are often used at different stages of the same order.
Can I charge GST on a proforma invoice or a delivery challan?
You can show tax on either for information, but it does not become payable and the buyer cannot claim input credit. GST liability and input credit arise only from a tax invoice.
Do I still need a tax invoice if I already sent a proforma invoice?
Yes. A proforma invoice is not a substitute for a tax invoice. Once the goods or services are supplied, you must raise a tax invoice, even if the buyer already paid against the proforma.
Which document do I use for job work?
A delivery challan. When a principal sends material to a job worker, ownership does not change, so the movement travels on a delivery challan under CGST Rule 55, not on an invoice.
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Written and maintained by the OnlineBillGenerator editorial team. Formats and tax figures are checked against official Indian sources (the GST portal / CBIC and the Income Tax Department) and reviewed periodically. This is general information for record-keeping, not professional tax advice.