General information, not professional advice. GST rules, rates and due dates change by notification. Check the current position on the GST Portal or with your CA before you act on anything here.
The short version
- A delivery challan carries goods when a tax invoice cannot be issued yet, and it is not a bill.
- Main cases: job work, supply on approval, liquid gas where the quantity is not known at despatch, goods moved in parts, and transport for reasons other than supply.
- Three copies: original for the consignee, duplicate for the transporter, triplicate for the consignor.
- The challan number and date go on the e-way bill when one is required.
- When the supply is finally fixed, a tax invoice is issued and it is the invoice, not the challan, that carries the tax.
What a delivery challan is
It is a document that accompanies goods when the value or the fact of supply is not yet settled, so a tax invoice would be wrong. It records what is moving, how much of it, and between whom. It is not a demand for payment and it does not carry tax as a charge.
When you may use one
- Job work. Material sent to a job worker and back again.
- Supply on approval. Goods sent for the buyer to inspect or try, where the sale happens only if they keep them.
- Liquid gas where the quantity at the time of removal is not known.
- Goods sent in parts or in a semi-knocked-down state, where a single supply travels in several consignments. The complete invoice goes with the first consignment, and each subsequent one carries a challan referring to it.
- Transport for reasons other than supply: stock moved to your own branch or godown, goods going to an exhibition, equipment sent for repair.
What it must contain
- Date and a serial number
- Name, address and GSTIN of the consignor
- Name, address and GSTIN or UIN of the consignee, if registered
- HSN code and description of the goods
- Quantity, at least provisionally where the exact quantity is not known
- Taxable value
- Tax rate and amount, where the transport is for supply
- Place of supply, for inter-state movement
- Signature
Copies and the e-way bill
Three copies, marked original for the consignee, duplicate for the transporter and triplicate for the consignor. Where the consignment crosses the e-way bill threshold, the challan's number and date are what you enter in the document fields of the e-way bill, because there is no invoice number to enter.
Job work and the return of goods
Material going out to a job worker travels on a challan, and the processed goods come back on the job worker's challan. Inputs are to come back within one year and capital goods within three, or the original despatch is treated as a supply. Keep the outward and inward challans paired, because that pairing is what proves the goods came back inside the window.
The mistake to avoid
Using a challan where an invoice was due. If the supply is fixed and the value is known, the document is a tax invoice, and moving goods on a challan instead delays your own tax and denies your buyer their credit. The challan exists for the cases above, not as a lighter alternative to billing.
Keeping the paper trail straight
Whatever moves the goods, the books have to agree with the shelf. In AawazAI, stock moves when a sale or a purchase is confirmed, a return puts it back at cost, and a stock audit records the difference between the shelf and the book as an adjustment you approved. When the supply is finally fixed, say the sale and the tax invoice is generated and reported.
Stock that matches the shelf
Every sale, purchase, return and damage entry moves stock in AawazAI, and a stock audit records the difference you found. Ask “kitna maal bacha hai” and get an answer from the books.
Frequently asked questions
Is a delivery challan the same as an invoice?
No. An invoice is raised when a supply happens and it carries the tax. A delivery challan accompanies goods when the supply is not yet fixed, such as job work, goods on approval, or a transfer between your own premises.
Do I need an e-way bill with a delivery challan?
If the consignment crosses the value threshold for e-way bills, yes. You generate the e-way bill using the challan's number and date in place of an invoice number.
Can I move goods to my own godown on a challan?
Yes. Movement for reasons other than supply, including a transfer to your own branch or warehouse, is exactly what a delivery challan is for. Whether a tax invoice is also needed depends on whether the two places are separately registered.
What happens if goods sent on approval are not sold?
They come back on a challan and no supply has taken place. If the buyer keeps them, a tax invoice is issued at that point, and there is an outer time limit of six months from removal for this to be settled.
Does a delivery challan need a GST number?
It carries the consignor's GSTIN, and the consignee's GSTIN or UIN where they are registered. An unregistered consignee's name and address are recorded instead.