Delivery Challan Meaning & Format

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Introduction – 

Suppose you are a supplier of goods and you want to transfer your goods from one of your warehouses to another in another city for job work. Well, you can’t just stuff up goods in a truck and transport them from one state to another. It is not as easy as it sounds. 

Tracking these goods becomes a task because any damage can take place while transporting the goods such as theft or spillage. 

To accurately track these goods before a sale takes place, a delivery challan is issued. In this blog, let us see what a delivery challan is, Its benefits, and much more.

What is delivery Challan?

A Delivery Challan, Dispatch Challan, or a Delivery Slip is a legal document that is issued at the time of removal of goods which may or might not result in sales. A Delivery Challan is the principal document when the goods are only being transported from one place to another. 

Let us take an example for further clarity. 

Mr. Shaam owns a computer shop in multiple cities in India. Hence, he sells computers all across India. Now, let’s assume that he wants to send one of the computers to his shop in Delhi from his shop in Gujarat. 

So, According to the Section 55 (1), Mr. Shaam is required to issue a delivery challan containing all the details of this transport. Notice, that the sale of goods is not made yet, this is why Mr. Shaam is issuing a Delivery Challan in place of a Tax Invoice. 

When is a Delivery Challan Issued?

According to the Section 55 (1) of CGST rules, it is clarified that a Delivery Challan must be issued in such circumstances – 

  • When supplying liquid gas where the quantity of supply at the time of removal from the place of supplier is not confirmed. 
  • For all the goods transported for job work
  • When the goods are being transported for reasons other than supply
  • In the case of transportation of Semi-Knocked Down Goods (Semi-Finished) and Completely Knocked Goods (Fully Disabled Goods). 
  • When the goods are transported on an approval basis. Meaning, when a supplier transports the goods intra-state/out for a sale or return basis. 

What are the benefits of Issuing a Delivery Challan?

Acts as the proof of delivery – 

The Delivery challan represents evidence of the legal movement of goods. Thus, this document helps the recipient in cross-checking the goods delivered based on the challan.

No E-way Bill is required – 

In the case when an E-way bill is not required such as whenever the tax invoice or the bill of supply is not issued, a Delivery Challan will do the work. 

Streamlined Invoicing – 

A Delivery Challan makes it easy for a supplier to raise invoices. This is because a delivery challan contains all the details such as the goods’ description, their quantity, and the date of delivery. 

Format of the Delivery Challan in Word

Following is the format of the Delivery Challan in Word – 

 

XYZ Enterprise                                                                         Delivery Challan                                            

XYZ Enterprise, XYZ road,                                                     Challan No:                                                      1                                    

Vapi                                                                                             Challan Date:                                       27/8/2023

                                                                                                      Due Date:                                             28/1/2024

                                                                                                      Driver License:                                             1234

                                                                                                      Driver Name:                                           Driver 1 

BILL TO

ABC

Mobile No.- 1234567890

 

Sr.No  Items/

Service

HSN/SAC Quantity Rate Tax Amount
1. Sample Good 12345 3 Box 196.43 70.71

(12%)

660
2. Sample Good 2 12456 5 500 0

(0%)

2500

TERMS AND CONDITIONS

  • Goods once sold will not be taken back  or exchanged
  • All disputes are subject to [ENTER_YOUR_CITY_NAME] jurisdiction only

TAXABLE AMOUNT                        ₹ 3,089.29

CGST @6%                                         ₹35.36

SGST @6%                                         ₹35.36

TOTAL AMOUNT                              ₹3,160

Received Amount                               ₹ 0

 Total Amount (in words)                 Three Thousand One Hundred Sixty Rupees

Delivery Challan in Accordance with GST 

Let’s look at the crucial components that you must know when issuing a Delivery Challan in accordance with the GST. 

Serial Number – 

Every Delivery Challan must have a unique serial number. This helps in smooth record keeping and makes it easier for a supplier to easily identify and track these documents. 

Cosignor and Cosignee Details – 

The details such as the name, address, and the Goods and Services Tax Identification Number (GSTIN) of both the Cosignor (Sender) and the Cosignee (Receiver) must be on the Delivery Challan. 

Goods’ Description – 

A Granular description of the goods being transported must be on the Challan. This includes the Value, Quantity and any other special characteristics that might help in identifying the goods. 

Signature of the Authorized – 

Lastly, The signature of the person in charge is essential. The signature can be of the consignor or any other person who is responsible for the underlying transport of goods. 

If you are still confused about the difference between the Delivery Challan and the Tax invoice then let us clear it. 

Delivery Challan Vs Tax Invoice

Delivery Challan

Tax Invoice

The main aim of the Delivery Challan is to capture the movement of goods. It captures this by confirming the description, quantity and condition of the goods.  The main aim of a Tax Invoice is to represent a sale and serve as the principal document for the formal demand of payment. It includes information like applicable taxes, the total value of goods, etc. 
A delivery Challan does not have any information related to the tax application on the goods.  A tax invoice acts as proof of ownership for the buyer. A tax Invoice lets the buyer claim the input tax credit (ITC) under the GST rules. 
A Delivery Challan is typically issued before or during the delivery of goods. A tax Invoice is issued after the sale has been completed. 

Also Read: Delivery Challan Under GST: Meaning, Rules & Format

Conclusion – 

To summarize, A delivery challan is an essential document for tracking the movements of goods that may or may not result in a sale. Delivery challan also simplifies invoicing and acts as proof of delivery for suppliers. 

It plays a crucial role in the smooth record-keeping of goods while adhering to GST regulations. I hope you found today’s blog interesting and learned something from it. 

FAQs (Frequently Asked Questions)

When is issuing a delivery challan mandatory?

Issuing a delivery challan is mandatory under situations like – 

  • When supplying liquid gas where the quantity of supply at the time of removal from the place of supplier is not confirmed. 
  • For all the goods transported for job work
  • When the goods are being transported for reasons other than supply
  • In the case of transportation of Semi-Knocked Down Goods (Semi-Finished) and Completely Knocked Goods (Fully Disabled Goods). 
  • When the goods are transported on an approval basis. Meaning, when a supplier transports the goods intra-state/out for a sale or return basis.

Does a delivery challan include any tax information?

No, a delivery challan does not include any tax information about the goods. A delivery challan contains information such as the description, quantity and the due delivery date of the goods. 

Can you use a delivery challan instead of a tax invoice?

No, A delivery challan cannot replace a tax invoice. Both delivery challan and tax invoice play different roles in the transportation of goods.  

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Yash Elwadhi
Yash Elwadhi is a seasoned finance writer and the founder of Avocado Content Services, a content agency. With a strong passion for disseminating knowledge on personal finance, taxation, and investing, Yash has collaborated with industry leaders and top BFSI companies across the country.

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