Delivery Challan in India — Complete Guide for 2025–26
A practical, beginner-friendly guide to delivery challans under GST. Learn when to issue one, what fields are mandatory, how it differs from a tax invoice, and the GST rules you must follow.
What is it?
A delivery challan is a document that accompanies goods when they are transported without a sale taking place. It proves the goods are in transit lawfully.
When used?
Used for job work, branch transfers, goods on approval, samples, and any goods movement where no invoice can yet be raised.
Why important?
Without a delivery challan, transporting goods without an invoice is a GST compliance violation. It also protects both sender and receiver in disputes.
Not an invoice
A delivery challan does not charge GST, does not transfer ownership, and cannot be used by the recipient to claim Input Tax Credit (ITC).
What is a Delivery Challan?
A delivery challan is a formal document issued under Rule 55 of the CGST Rules, 2017, that accompanies goods during transport when a tax invoice cannot be issued at that time. It acts as a transit document — proof that the goods are moving for a legitimate, documented reason.
In simple terms: not every movement of goods is a sale. A factory might send raw materials to a job worker for processing. A business might move stock from its Delhi warehouse to its Mumbai showroom. A supplier might send goods to a client on a trial basis. In all these cases, no sale has occurred yet — but the goods still need to move, and the law requires them to be accompanied by a proper document.
That document is the delivery challan. It identifies the goods, their origin, destination, quantity, and the reason for transport — without charging GST, because no supply has taken place.
Once the purpose of the challan is fulfilled — the job work is done, the goods are approved by the buyer, or the branch accepts the stock — the next step is to raise a proper GST tax invoice or have the goods returned with a return challan.
When is a Delivery Challan Required?
These are the most common practical situations where a delivery challan is the correct document to issue instead of a tax invoice.
Goods Sent for Job Work
When a manufacturer sends raw materials or semi-finished goods to a job worker for processing (e.g., cutting, stitching, polishing), a delivery challan must accompany the consignment instead of an invoice, since no sale has taken place.
Transportation Without Sale
Moving goods from one godown to another, or from a warehouse to a retail outlet within the same business. There is no sale involved, so no invoice can be raised — a challan documents the movement.
Sending Samples
When goods are sent as free samples to a prospective buyer for evaluation, no payment is expected upfront. A delivery challan records the dispatch without any tax liability.
Goods on Approval Basis
Goods dispatched to a customer who will decide later whether to buy or return them. Since ownership and payment haven't transferred, an invoice is premature — a challan is the correct document.
Semi-Finished Goods Transfer
Transferring work-in-progress goods between two units of the same business, such as from a factory floor to an assembly unit, requires a delivery challan to track the movement.
Branch Transfer
When a company transfers finished or unfinished goods between its own branches in different cities or states, a delivery challan (and e-way bill where applicable) documents the internal transfer.
Mandatory Fields in a Delivery Challan
Rule 55 of the CGST Rules specifies the information that must be present on every delivery challan.
| Field | Description | Status |
|---|---|---|
| Challan Number | A unique serial number for the delivery challan, maintained sequentially within a financial year. | Required |
| Challan Date | The date on which the challan is issued and goods are dispatched. | Required |
| Consignor Name & Address | Full name and address of the sender (the business dispatching the goods). | Required |
| Consignor GSTIN | 15-digit GSTIN of the consignor, if registered under GST. | Required |
| Consignee Name & Address | Full name and address of the person or entity receiving the goods. | Required |
| Consignee GSTIN | GSTIN of the recipient if they are a registered business. | If applicable |
| HSN / SAC Code | The correct code for the goods being dispatched, required for GST identification. | Required |
| Description of Goods | Clear, accurate description of the items being sent. | Required |
| Quantity & Unit | Number of units dispatched and the unit of measurement (e.g., kg, pcs, boxes). | Required |
| Taxable Value | The value of goods being dispatched (even if no tax is charged at this stage). | Required |
| Purpose of Dispatch | Reason for sending goods — job work, sample, branch transfer, approval, etc. | Required |
| Signature | Authorised signature of the consignor or their representative. | Required |
| Vehicle / Transport Details | Vehicle number, transporter name, and LR/RR number if applicable. | If applicable |
Delivery Challan — Sample Format
A realistic preview matching the UdyogiBazaar challan generator output — with transport strip, dispatch summary, receiver acknowledgement box, and declaration.
Delivery Challan vs Tax Invoice
Understanding the difference is crucial — using the wrong document can result in GST penalties or loss of ITC. See our detailed Invoice vs Challan guide for a deeper comparison.
| Aspect | Delivery Challan | Tax Invoice |
|---|---|---|
| Purpose | Document movement of goods without a sale | Bill the buyer for goods or services sold |
| Ownership Transfer | No — goods remain with the sender | Yes — ownership passes to the buyer |
| Tax Applicability | No GST charged at the time of dispatch | GST is charged and collected |
| Payment Required | No payment from recipient at this stage | Payment expected as per invoice terms |
| ITC Claim | Receiver cannot claim ITC on a challan | Receiver can claim ITC on a valid tax invoice |
| GST Return Impact | Not reported in GSTR-1 | Reported in GSTR-1 and affects GST liability |
| E-way Bill Required | Yes, if value exceeds ₹50,000 and goods cross 10 km | Yes, same threshold applies |
GST Rules for Delivery Challan
Key provisions from the CGST Rules, 2017 that every business issuing delivery challans must know.
Rule 55 of CGST Rules
Delivery challans are governed by Rule 55 of the CGST Rules, 2017. It specifies when a challan can be issued instead of a tax invoice and mandates the information it must contain.
Three Copies Required
The delivery challan must be prepared in triplicate: the original goes with the consignment for the consignee, the duplicate is for the transporter, and the triplicate is retained by the consignor.
E-way Bill Requirement
If the value of goods in a delivery challan exceeds ₹50,000 and the goods are transported for more than 10 km, an e-way bill must be generated on the GST portal before dispatch.
Job Work Time Limit
Goods sent for job work under a delivery challan must be returned within 1 year (for inputs) or 3 years (for capital goods). If not returned, it is treated as a supply and GST becomes payable.
Goods on Approval
Goods sent on approval must be returned or an invoice must be raised within 6 months from the date of dispatch. Failing this, the supply is deemed to have taken place.
How to Create a Delivery Challan
Follow these steps to issue a compliant delivery challan every time. You can also use our free challan generator to skip the manual work.
Determine the Purpose
Confirm that the goods movement qualifies for a delivery challan — job work, sample, branch transfer, approval, etc. If it's a sale, issue a tax invoice instead.
Assign a Challan Number
Use a sequential numbering system, separate from your invoice series. Example: DC/2024-25/001. Keep this consistent throughout the financial year.
Fill Consignor & Consignee Details
Enter your full business name, address, and GSTIN. Add the recipient's name and address, and their GSTIN if they are a registered business.
List the Goods Being Dispatched
Describe each item with HSN code, quantity, unit, and taxable value. Even though no tax is charged now, the value must be stated accurately.
Mention the Purpose of Dispatch
Clearly state why the goods are being sent — job work, sample, approval, branch transfer, etc. This is legally important for GST compliance.
Add Transport Details
Note the vehicle number, transporter name, and any LR/RR number. This is required for e-way bill generation if the value exceeds ₹50,000.
Generate E-way Bill if Needed
If the consignment value exceeds ₹50,000, generate the e-way bill on the GST portal using your challan details before the goods leave your premises.
Print Three Copies & Dispatch
Print three copies — original for the recipient, duplicate for the transporter, and triplicate for your own records. File and track against future invoice or return.
Common Delivery Challan Mistakes to Avoid
These errors are frequently seen during GST audits and can result in penalties or ITC disallowance.
Issuing Challan Instead of Invoice for a Sale
The most critical mistake. If ownership of goods has transferred and payment is expected, a tax invoice must be issued — not a challan. Using a challan to avoid GST is a serious offence.
Missing HSN Codes
Delivery challans must include HSN/SAC codes for the goods. Without these, the challan is incomplete and can create issues in e-way bill generation and job work tracking.
Not Generating E-way Bill
For goods worth more than ₹50,000 transported over 10 km, an e-way bill is mandatory even for a delivery challan. Skipping this can result in the goods being seized during transit.
No Time Limit Tracking for Job Work
Goods sent on a challan for job work must be returned within the prescribed time. Many businesses forget to track this and end up with a deemed GST liability.
Reusing Challan Numbers
Like invoices, delivery challan numbers must be unique within a financial year. Duplicate numbers can cause reconciliation issues.
Wrong Purpose Stated
Always accurately state the reason for dispatch. Vague descriptions like 'for delivery' instead of 'for job work' or 'on approval basis' can create compliance gaps during audits.
Frequently Asked Questions
Common questions about delivery challans under GST in India.
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