“Quotation” and “invoice” are often used loosely, but they sit at opposite ends of a sale. One is a promise of price before the deal; the other is a demand for payment after it. Knowing the difference keeps your sales process — and your GST — clean.
What is a quotation?
A quotation (or quote/estimate) is a document you give a prospective customer before a sale, stating the expected price for goods or services. Its job is to help the customer decide — it is essentially a formal offer. A quotation:
- Is issued before any supply
- States estimated prices, often with a validity period
- Creates no obligation to pay
- Is not a GST document and does not create tax liability
What is an invoice?
An invoice is issued at or after the supply and is a demand for payment recording an actual transaction. If you are GST-registered, this is a tax invoice that:
- Records a real supply
- Creates a GST liability on you
- Lets a registered buyer claim input tax credit
- Must follow Rule 46 (mandatory fields, serial numbering)
Quotation vs invoice — side by side
| Feature | Quotation | Invoice (Tax Invoice) |
|---|---|---|
| Timing | Before the sale | At/after the sale |
| Purpose | Offer a price | Demand payment |
| Obligation to pay | None | Yes |
| GST liability | No | Yes |
| Enables ITC | No | Yes (for registered buyer) |
| Uses invoice serial number | No | Yes |
| Typical validity | Limited (e.g. 15–30 days) | N/A — it’s a record |
Where the proforma invoice fits
Between a quotation and a tax invoice sits the proforma invoice — a document that looks like an invoice but is still issued before supply, often to confirm an order or request an advance. Like a quotation, a proforma creates no GST liability; it simply presents the expected bill in invoice format. The sequence usually runs:
Quotation → (customer accepts) → Proforma invoice / order → Supply → Tax invoice
When to use each
Use a quotation when:
- A customer asks “how much will this cost?”
- You are bidding or competing for work
- The scope or price is not yet finalised
Use an invoice when:
- You have supplied the goods or services (or are supplying them now)
- Payment is due
- You need to record the sale for GST and accounts
What a good quotation contains
Even though it’s not a statutory document, a professional quotation includes:
- Your business name and contact details
- A quotation number and date
- The customer’s name
- A description of goods/services with unit prices
- Estimated taxes (shown for clarity, not charged)
- The total estimated cost
- Validity period and any terms
A quick example
A customer asks for pricing on 100 chairs:
- You send a quotation: 100 chairs @ ₹1,000 = ₹1,00,000 + estimated 18% GST = ₹1,18,000, valid 15 days. No tax liability yet.
- The customer accepts and places an order (you may issue a proforma for an advance).
- You deliver the chairs and issue a tax invoice for ₹1,00,000 + ₹18,000 GST — now the GST is payable and the buyer can claim ITC.
The bottom line
A quotation is a pre-sale price offer with no obligation and no GST; an invoice is a post-sale demand for payment that creates GST liability and enables ITC. Use quotations to win the work, proformas to confirm it, and tax invoices to close it.
Turn an accepted quote into a compliant GST tax invoice in under a minute with the free RaiseBill Bill Maker.