Proforma invoice vs tax invoice: which one a monthly fee needs

A proforma invoice is a quote written in the shape of an invoice. It tells the customer what a supply will cost before it happens, and it carries no tax effect at all. A tax invoice is the document the Central Goods and Services Tax Act, 2017 prescribes, and it is the one your customer needs to claim input tax credit. The clearest evidence of the difference is in the Act itself: the words proforma invoice do not appear anywhere in it, while section 31 is titled Tax invoice and sets out when each registered person has to issue one. Sending a proforma and treating it as billed is the mistake that follows from the resemblance.

For anyone charging the same fee every month, that gap has a date attached. A monthly fee under a contract is a continuous supply of services, and for those the Act does not leave the timing to you. Where the due date of payment can be read off the contract, the tax invoice has to be issued on or before that date. A proforma sent on the first of the month is a reminder, not compliance with that rule.

What follows was written from the consolidated Central Goods and Services Tax Act, 2017 published by the Central Board of Indirect Taxes and Customs, read on cbic-gst.gov.in on November 11, 2026, in the version marked as on 30.09.2020. Sections 2(33) and 31 are quoted by number below. Later amendments and the CGST Rules add detail this page does not cover, and this is not tax or legal advice.

The two documents, side by side

The table below separates what each document does. The right-hand column is what section 31 prescribes. The left-hand column is commercial practice, because the Act has nothing to say about it.

Why a monthly fee is a continuous supply of services

Section 2(33) defines the term, and the definition reads like a description of a subscription. A continuous supply of services is a supply provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations.

Four things have to be true together. There is a contract. The service is recurrent. The period runs longer than three months. The payments come due periodically. A school charging tuition for an academic year meets all four. So does a gym on an annual membership billed monthly, a housing society collecting maintenance, and a clinic on a yearly care plan.

What changes once the definition applies

Section 31(5) takes the timing out of your hands and hands it to the contract. It gives three cases, and the first is the one most recurring billing falls into.

1. 1Where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment.
2. 2Where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment.
3. 3Where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.

Read case one next to a fee agreement that says payable by the 5th of each month. The 5th is now the invoice deadline, not just the payment deadline. Most billing software treats the invoice as something you raise when you get round to it, and for a continuous supply that reading is wrong by as many days as you are late.

The case that catches people mid-year

Section 31(6) covers a contract that ends early. Where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases, and to the extent of the supply made before the cessation. A student who leaves in October on an April-to-March agreement is that case. The invoice is due when they leave, for the part already supplied.

What to send when money arrives before the service

This is where the proforma gets used as a stand-in, and where the Act already has a document. Section 31(3)(d) says a registered person shall, on receipt of advance payment with respect to any supply, issue a receipt voucher or other prescribed document evidencing receipt of that payment.

So an advance has its own paper. A proforma invoice asks for the money and a receipt voucher records that it arrived. Section 31(3)(e) adds the other half: if you issued a receipt voucher, no supply follows and no tax invoice is issued against it, you may issue a refund voucher against that payment.

Three cases where the tax invoice is not the document

Section 31(3) also lists situations where something else applies. Each one matters to a small recurring biller more than to a large one.

• Under 200 rupees. A registered person may not issue a tax invoice if the value of the supply is less than two hundred rupees, subject to the prescribed conditions and manner. A small monthly add-on can sit under that line while the main fee does not.
• Exempt supplies, or tax paid under section 10. A bill of supply is issued instead of a tax invoice, with its own prescribed particulars. A composition dealer bills this way for everything.
• The first month after registration. Within one month from the date of issuance of the registration certificate, a registered person may issue a revised invoice against invoices already issued between the effective date of registration and the date the certificate arrived.

The habit that keeps the date from slipping

Everything above collapses into one operational question. Does the tax invoice for a period go out inside that period, or does it go out while you are still chasing the previous one?

Two dates are worth writing into the client record on the day they sign, because neither changes often. The first is the due date their contract fixes, since section 31(5)(a) turns it into the invoice deadline. The second is whether they are registered under GST, since an unregistered customer has nothing to claim and will not chase you for the document.

A proforma invoice is still useful before any of this. It is the right thing to send a parent asking what next year costs, or a company that needs a figure approved before a purchase order exists. The proforma invoice template is built for that conversation. When the supply is agreed, the GST invoice format and the tax invoice template carry the fields of the real document, the invoice template is the general-purpose version and the bill generator produces one without a spreadsheet. When a figure already billed turns out too low, the debit note guide covers the document that raises it.

Makatea sends the reminder for each fee on its date by WhatsApp and email, records the payment you register against the fee it settles, and stops writing to that customer about it once it is paid. It does not issue the tax invoice and it does not move money, so the GST fields stay in your invoicing. Plans and the 14-day free trial without a card are on pricing.