Original proforma invoice

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2014 Hi Good Evening,

I would like to know whether Original Proforma Invoice is required to make the payments if yes under which Notification of Income tax, what if the vendor is not ready to provide the original Proforma Invoice for the advance payment, can we go ahead and make the payment on the basis of scanned image.

Thanks
Mannu

Rupesh Jain

Rupesh Jain (Expert)
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19 April 2014 YOU HAVE ANY PROOF TO PROVE FOR MAKING PAYMENT OT ANY ONE.
IT MAY SCAN OR PHOTOCOPY. THEN YOU MAKE PURCHASE ORDER AND SEND THE PAYMENT TO VENDOR.

Message likes : 2 times

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2014 Hi Thank you for your reply, but I would like to know the statutory requirement of the same. We usually reject making payments on proforma invoices till the vendor provides us the original Proforma Invoice. We hadrly make any payments on soft copy of proforma invoice, it is feasable to hold payments like this ????

Thanks
Mannu

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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09 August 2024 In the context of Indian taxation and accounting practices, the use and acceptance of a proforma invoice are not governed by specific statutory requirements for payments. Here’s a detailed breakdown:

### Understanding Proforma Invoices

- **Proforma Invoice Definition:** A proforma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. It provides an estimate of the costs involved and is not a legally binding document for making payments.

### Statutory Requirements and Practical Considerations

1. **Payments Against Proforma Invoice:**
- **No Specific Notification for Proforma Invoice:** There is no specific Income Tax notification or law that mandates the requirement of an original proforma invoice for making payments. Proforma invoices are generally used for quoting and preliminary purposes and are not considered a formal document for accounting or tax purposes.
- **Vendor Practices:** While it’s common for businesses to request original invoices or documents for formal record-keeping and compliance, the statutory requirement to hold payments against original proforma invoices specifically does not exist.

2. **Handling Payments:**
- **Scanned Copies:** If a vendor is not ready to provide the original proforma invoice but sends a scanned copy, you can proceed with the payment, provided you have sufficient internal controls and documentation to justify the advance payment.
- **Internal Policies:** It is prudent to have internal policies for handling payments, including requiring original invoices for record-keeping and ensuring that payments are properly documented. This practice helps in reconciling accounts and maintaining compliance with internal controls, though it’s not mandated by law.

3. **Accounting and Documentation:**
- **Record-Keeping:** Make sure that you maintain proper records of all communications and payments. The scanned proforma invoice should be retained as part of your preliminary documentation. Once the goods or services are delivered, ensure that you receive the final invoice for proper accounting.
- **Final Invoice:** The final tax invoice or bill is essential for accounting and claiming input tax credit (if applicable). Ensure that you receive and record this final invoice as it will be required for tax purposes.

### Summary

- **No Legal Mandate:** There is no specific legal requirement under Income Tax or GST laws that mandates the use of an original proforma invoice for making advance payments.
- **Best Practices:** It is a good practice to request original invoices and ensure proper documentation for payments. However, scanned copies can be used for processing payments if the original is not immediately available, as long as internal controls and documentation procedures are followed.

Always ensure to review your company’s internal policies and consult with a professional accountant or legal advisor if you have concerns or specific requirements related to your industry or business practices.

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