Delivery Challan Under GST: When to Use It, Format and Required Details

When can you use a delivery challan?

Rule 55(1) allows the consigner to issue a delivery challan "in lieu of invoice at the time of removal of goods for transportation" in these cases:

• Supply of liquid gas where the quantity is not known at the time of removal from the supplier.
• Transportation of goods for job work (goods sent to a job worker and brought back).
• Transportation of goods for reasons other than by way of supply, for example goods sent for repair, for display at an exhibition, back to the supplier, or your own goods moved between your godowns.
• Such other supplies as may be notified by the Board (CBIC).

Details a delivery challan must contain

Rule 55(1) lists the details. A simple challan format covers all of them:

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Most businesses also print the purpose of the movement (job work, on approval, exhibition and so on) and the vehicle number. This is not listed in Rule 55, but it helps the transporter and the receiver.

Three copies: original, duplicate, triplicate

Rule 55(2) says that, in case of supply of goods, the challan is prepared in triplicate: the original marked "Original for Consignee", the duplicate marked "Duplicate for Transporter" and the triplicate marked "Triplicate for Consigner". The receiver keeps the original, the driver or transporter carries the duplicate, and you keep the third copy in your records.

Is an e-way bill needed with a delivery challan?

Yes, where the e-way bill rules apply. Rule 55(3) says goods moved on a delivery challan in lieu of invoice must be declared as specified in Rule 138, which is the e-way bill rule. On the e-way bill form, "Delivery Challan" is one of the document types, and the challan number and date are entered as the document details. The usual value limit and exemptions of Rule 138 apply; for example, goods sent by a principal in one State to a job worker in another State need an e-way bill whatever the value.

For how e-way bill data is prepared from your bills, see the e-way bill and e-Invoice JSON guide.

Goods sent in lots or in knocked-down condition

When goods of one sale go in parts, in batches or lots, or in semi or completely knocked-down condition, Rule 55(5) gives a fixed method:

1. Issue the complete tax invoice before the first consignment leaves.
2. Issue a delivery challan for each later consignment, quoting the invoice number.
3. Send each consignment with its challan and a certified copy of the invoice.
4. Send the original invoice with the last consignment.

Job work and goods sent on approval

• Job work: inputs sent to a job worker on a challan must come back (or be supplied from the job worker's place) within one year, and capital goods within three years. If they do not, the original sending is treated as a supply on that date and tax is payable (Section 143 of the CGST Act).
• Goods sent on approval (sale or return): Section 31(7) says the tax invoice must be issued when it becomes known that the supply has taken place, or six months from the date of removal, whichever is earlier. Until then the goods can move on a challan.
• Goods returned by the customer after a sale are not handled on a challan alone. Issue a credit note against the original bill (see the credit note and sales return guide).

Delivery challan vs tax invoice

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Delivery challans in BizBahi

• Open Delivery challans from the menu and add a customer, the items and quantities. Choose a purpose (Supply of goods, Job work, Supply on approval, Sales return, Exhibition / display, Own use / branch transfer or Other) and, if you like, the vehicle number.
• Each challan gets the next number of its own series with the DC prefix, separate from your invoice series, and the series restarts in the new financial year.
• Saving a challan does not change stock or the customer's khata. The printed copy is titled "Delivery Challan" and says it is not a tax invoice.
• When the sale is final, convert the challan to a tax invoice: BizBahi makes an unpaid (credit) invoice with the same items and totals. After conversion the challan is locked, so any change is made on the invoice.
• With a sales order you can deliver in parts using challans and bill in parts; the order shows what is still pending.
• Item-wise reports can include challans, so you can see the quantity sent out on challans.

Quick checklist

1. Check the reason: job work, approval, repair, exhibition or own transfer can go on a challan; a normal sale needs a tax invoice.
2. Fill every Rule 55 detail: number, date, both parties, HSN, quantity, value, tax (where for supply), place of supply (inter-State) and signature.
3. Print three copies: for consignee, transporter and your records.
4. Make an e-way bill if Rule 138 applies, with "Delivery Challan" as the document type.
5. Issue the tax invoice once the sale is confirmed, and track job work goods so they come back in time.

What is a delivery challan in GST?

It is a document issued under Rule 55 of the CGST Rules when goods are moved without a tax invoice, for example for job work, on approval, for repair, to an exhibition or between your own places of business.

Can I sell goods on a delivery challan instead of an invoice?

Not for a normal sale. A sale needs a tax invoice. If goods meant for supply leave on a challan because the invoice could not be issued at removal, the tax invoice must be issued after delivery (Rule 55(4)).

How many copies of a delivery challan are needed?

Three, in case of supply of goods: Original for Consignee, Duplicate for Transporter and Triplicate for Consigner.

Is an e-way bill required for a delivery challan?

Yes, where Rule 138 applies. Goods moved on a delivery challan must be declared under the e-way bill rule, using "Delivery Challan" as the document type. Goods sent to a job worker in another State need an e-way bill whatever the value.

What is the maximum length of a delivery challan number?

16 characters, serially numbered in one or more series, the same limit as a tax invoice number.

Can I convert a delivery challan into an invoice in BizBahi?

Yes. Converting a challan makes an unpaid (credit) tax invoice with the same items and totals, and the challan is then locked.