Billing
Delivery Challan: Meaning, Format and GST Rule 55
When you need a delivery challan instead of a tax invoice, the fields GST Rule 55 makes mandatory, how many copies to print, and when an e-way bill is needed.
In short
A delivery challan is the document that travels with goods when they move without being sold — for job work, on approval, for an exhibition, or between your own godowns under the same GSTIN. It carries no GST charge and no ownership transfer; CGST Rule 55 lists what it must contain and requires it in triplicate.
- Rule 55 requires the challan number and date, consignor and consignee details with GSTIN, HSN code, description, quantity, taxable value, place of supply for inter-state movement, and a signature.
- Print it in triplicate: the original for the consignee, the duplicate for the transporter and the triplicate for your own records.
- Inputs sent for job work must come back within one year, and capital goods within three years, or the dispatch is treated as a supply on the day it left.
- Goods sent on approval must be invoiced or returned within six months of removal.
- An e-way bill is still needed when a challan covers goods worth more than ₹50,000, and for inter-state job work of any value.
What is a delivery challan?
A delivery challan is a document that accompanies goods when they are moved but not sold. It tells the transporter, the receiver and any GST officer on the road what is being carried, how much of it, and why — without charging tax, because no sale has happened yet.
The most common case is job work: a manufacturer sends raw material to another unit for processing and expects it back. Nothing has been sold, so a tax invoice would be wrong, but the goods still need a document to travel with. That document is the delivery challan.
If you need one right now, the free delivery challan maker produces a Rule 55 challan as a PDF without signing up.
When you issue a delivery challan instead of an invoice
CGST Rule 55 allows goods to move on a delivery challan in these situations:
- Job work. Raw material or semi-finished goods sent to a job worker for processing, and the processed goods coming back.
- Goods sent on approval (sale or return). The customer may keep or return them; the sale only happens if they keep them.
- Movement that is not a supply — goods sent for an exhibition, for repair, or for testing, free samples given to unrelated customers, and stock moved between two godowns registered under the same GSTIN.
- Supply of liquid gas where the exact quantity is not known when the tanker leaves.
- Goods sent in parts (completely or semi-knocked-down) — the full invoice is issued before the first lot leaves, each lot travels with a challan, and the original invoice goes with the last lot.
The test is simple: if ownership passes to someone else, it is a sale and needs a tax invoice. If ownership stays with you, a challan is the right document.
The branch-transfer trap
A transfer between two of your own locations in the same state under one GSTIN is a stock movement, so a challan is enough. A transfer to your branch in another state is different: that branch has its own GSTIN, and GST treats it as a separate person. The transfer is a supply, so it needs a tax invoice with IGST. Sending inter-state stock on a challan is one of the most common reasons goods are detained in transit.
What a delivery challan must contain (Rule 55)
Rule 55 lists the particulars. A challan missing any of them is not a valid document for moving goods.
| Field | What to write |
|---|---|
| Challan number | A serial number, unique within the financial year |
| Date of issue | The date the goods leave |
| Consignor | Name, address and GSTIN of the sender |
| Consignee | Name, address and GSTIN or UIN of the receiver, if registered |
| HSN code and description | For each item |
| Quantity | Exact, or provisional where the exact quantity is not yet known |
| Taxable value | The value of the goods, even though no tax is charged |
| Tax rate and amount | Only where the movement is for a supply to the consignee |
| Place of supply | For inter-state movement |
| Signature | Of the consignor or an authorised person |
Most businesses also add the transporter’s name, the vehicle number, the LR (lorry receipt) number and the reason for dispatch — “for job work”, “on approval”, “for exhibition”. None of these are in Rule 55’s list, but the reason for dispatch is what an officer reads first, so leaving it off invites questions.
Keep challans in their own number series, separate from your tax invoices. Mixing them breaks the consecutive numbering that both documents need.
Three copies, and who keeps which
Rule 55 requires the challan in triplicate:
- Original — for the consignee.
- Duplicate — for the transporter.
- Triplicate — for the consignor, kept on file.
The triplicate is the copy that matters later. When an assessment asks why a dispatch has no matching invoice, the triplicate challan is your answer.
Time limits that turn a challan into a sale
A challan is not open-ended. If the goods do not come back in time, GST treats the original dispatch as a supply, and tax is due from the date the goods left, with interest.
| Situation | Deadline |
|---|---|
| Inputs sent to a job worker | Returned within 1 year |
| Capital goods sent to a job worker | Returned within 3 years (moulds, dies, jigs and tools are excluded from this limit) |
| Goods sent on approval | Invoiced or returned within 6 months of removal |
Track open challans the way you track unpaid invoices. A challan that quietly passes its deadline is a tax liability nobody noticed.
Delivery challan and e-way bill
The e-way bill does not depend on whether you raised an invoice or a challan. It depends on the value of what is moving:
- Goods worth more than ₹50,000 need an e-way bill. Choose “Delivery Challan” as the document type and enter the challan number and date.
- Goods sent inter-state to a job worker need an e-way bill whatever their value.
- Some states set their own, often higher, limit for movement within the state. Check your state’s notification.
The e-way bill guide covers Part-A, Part-B, validity and extensions.
Delivery challan vs tax invoice
| Delivery challan | Tax invoice | |
|---|---|---|
| Records | Movement of goods | Sale of goods or services |
| Ownership | Stays with the sender | Passes to the buyer |
| GST charged | No | Yes |
| Input tax credit for the receiver | No | Yes |
| Copies (goods) | Triplicate | Triplicate |
| Governing rule | Rule 55 | Rule 46 |
When goods sent on approval are finally kept by the customer, you issue the tax invoice then, and the challan becomes the history of how the goods got there. The GST invoice format guide lists what that invoice needs.
Common mistakes
- Inter-state branch transfers on a challan. They need a tax invoice.
- No reason for dispatch. Rule 55 does not list it, but without it nobody can tell a job-work challan from goods that were sold without an invoice.
- No taxable value. “No tax” does not mean “no value”. Rule 55 asks for the value, and the e-way bill limit is calculated on it.
- Forgetting the return deadline. Job-work inputs not back in a year become a supply.
- Sharing a number series with invoices. Keep challans in their own series.
How VyapRise handles delivery challans
In VyapRise, a delivery challan is a document of its own, and it can be raised from a quotation or a customer order. When the customer keeps the goods, the challan is converted into a tax invoice without retyping the items. By default, stock is issued once, by the invoice, so the same goods are never taken out twice, and goods that are out on a challan but not yet billed appear in the Unbilled Challans report. Delivery challans are part of the Pro plan (a yearly plan) and open during the free trial.
For a single challan without an account, use the free delivery challan maker.
Frequently asked questions
Is GST charged on a delivery challan?
No. A delivery challan is issued when goods move without a sale, so no tax is collected on it. Rule 55 still asks you to show the taxable value, and to show the tax rate and amount where the goods are moving for a supply to the consignee — for example, when the quantity of liquid gas is only known at delivery.
What is the difference between a delivery challan and a tax invoice?
A tax invoice records a sale: ownership passes to the buyer, GST is charged and the buyer can claim input tax credit. A delivery challan records only the movement of goods. Ownership stays with the sender, no GST is charged and no input tax credit can be claimed against it.
How many copies of a delivery challan are required?
Three. The original goes to the consignee, the duplicate to the transporter and the triplicate stays with the consignor. The triplicate is your evidence, in an audit, of why goods left without an invoice.
Can I use a delivery challan for a transfer to another branch?
Only if both locations are under the same GSTIN — usually two godowns in the same state. A branch in another state has its own GSTIN, so a transfer to it is a supply under GST and needs a tax invoice, not a challan.
Do I need an e-way bill with a delivery challan?
Yes, when the goods are worth more than ₹50,000, exactly as with an invoice — choose 'Delivery Challan' as the document type. For inter-state movement to a job worker, the e-way bill is required whatever the value.