A delivery challan under GST is the document you use when goods leave your premises but no sale has happened yet, or the sale cannot be invoiced at that moment. Rule 55 of the CGST Rules lists when you may use one: liquid gas of unknown quantity, goods sent for job work, movements that are not a supply, and a few other cases.
Here is a typical case. On 5 November your godown sends 4,000 metres of grey fabric to a dyeing unit across town. Nobody has sold anything, so a tax invoice would be wrong. A challan, numbered and signed, travelling with the goods is the correct paper.
This guide covers when a challan is allowed, what it must show, how it fits with the e-way bill, and the clocks and returns that follow a job work challan. That last part is where businesses get caught.
What is a delivery challan under GST?
A delivery challan is a movement document. It records what left your premises, where it is going, why, and what it is worth. It does not raise tax on its own, and it is not a substitute for an invoice when a sale has actually taken place.
The legal basis is Rule 55 of the CGST Rules, 2017, titled "Transportation of goods without issue of invoice". If you are moving goods and an invoice is either not required or not possible yet, the challan carries the goods instead.
A challan is also not a way to delay invoicing a normal sale. If you sold the goods and know the quantity and price, you issue a tax invoice.
When does Rule 55 allow a delivery challan instead of an invoice?
Rule 55(1) allows a challan in four situations:
Supply of liquid gas where the quantity is not known at the time of removal. The challan shows a provisional quantity and the invoice follows once the quantity is fixed.
Transport of goods for job work, such as fabric sent for dyeing, castings sent for machining or parts sent for plating.
Transport for reasons other than supply, such as moving stock between two godowns under the same GSTIN, sending goods for repair, taking samples to an exhibition, or sending goods on approval.
Other supplies notified by the Board.
Rule 55(4) adds one more case. Where goods move for supply but the tax invoice could not be issued at the time of removal, you move them on a challan and issue the invoice after delivery. Rule 55(5) covers goods sent in semi knocked down or completely knocked down condition, or in batches or lots, which we work through below.
What must a delivery challan contain?
Rule 55 sets out the contents. Use this as a checklist when you design your challan format:
Date and number of the challan. The number must be consecutive, up to 16 characters, in one or more series.
Name, address and GSTIN of the consigner, if registered.
Name, address and GSTIN or UIN of the consignee, if registered.
HSN code and description of the goods.
Quantity. A provisional quantity is allowed where the exact figure is not known.
Taxable value.
Tax rate and tax amount (central tax, State or Union territory tax, integrated tax and cess) where the goods are moving to the consignee for supply.
Place of supply, for inter-State movement.
Signature.
For supplies, the challan is prepared in triplicate: original for the consignee, duplicate for the transporter and triplicate for the consigner. Keep the challan series separate from your invoice series.
Do you need an e-way bill with a delivery challan?
Often, yes. Rule 55(3) says goods moving on a delivery challan must be declared as specified in Rule 138, which is the e-way bill rule. Rule 138(1) applies to movement of goods with a consignment value above ₹50,000 whether the movement is for supply, for reasons other than supply, or due to inward supply from an unregistered person. The fact that no sale has happened does not exempt the movement.
Job work has a stricter rule. Where a principal in one State sends goods to a job worker in another State, the e-way bill must be generated by the principal irrespective of the consignment value. So a ₹20,000 consignment of castings sent from Gujarat to Maharashtra for machining still needs one.
When you generate the e-way bill, choose "Delivery Challan" as the document type and enter the challan number and date. If the movement is under a challan and no e-way bill is needed, the transporter carries the challan. For more on the e-way bill side, see our guide on how to generate an e-way bill.
Check your State's rules for movement within the State, because some States have notified their own limits for intra-State e-way bills.
Worked example: one machine, one invoice, three lots
Say you run a packaging machine manufacturer in Rajkot. A buyer in Pune orders one machine for a taxable value of ₹9,00,000. The machine is too large for one truck, so it goes in three lots. Assume IGST at 18% for this example; confirm the rate for your own HSN.
Rule 55(5) sets the sequence. You issue the complete tax invoice before the first lot leaves: invoice INV/26-27/0412 for ₹9,00,000 plus IGST of ₹1,62,000, a total of ₹10,62,000. Then each lot moves on its own challan that refers to that invoice, with a certified copy of the invoice. The original invoice travels with the last lot.
Lot | Challan | Contents | Taxable value | IGST at 18% | Travels with |
|---|---|---|---|---|---|
1 | DC/26-27/101 | Main frame | ₹4,20,000 | ₹75,600 | Certified copy of INV/26-27/0412 |
2 | DC/26-27/102 | Feeder and conveyor | ₹3,10,000 | ₹55,800 | Certified copy of INV/26-27/0412 |
3 | DC/26-27/103 | Control panel and spares | ₹1,70,000 | ₹30,600 | Original INV/26-27/0412 |
Total | ₹9,00,000 | ₹1,62,000 |
Check the arithmetic before the first truck leaves: ₹4,20,000 + ₹3,10,000 + ₹1,70,000 = ₹9,00,000, and ₹75,600 + ₹55,800 + ₹30,600 = ₹1,62,000. The lot values must add up to the invoice exactly. If they do not, someone at a checkpost will notice before you do.
Each lot here is above ₹50,000 and inter-State, so each needs its own e-way bill generated against its own challan, with the lot value as the consignment value. The tax is reported once, on the invoice, in the month the invoice is issued. The challans do not create a second liability.
Job work challans: the one-year and three-year clock
The job work challan starts a clock that many owners forget. Under Section 143 of the CGST Act, inputs sent to a job worker must come back, or be supplied from the job worker's premises, within one year. Capital goods get three years. Moulds, dies, jigs, fixtures and tools are treated separately and are outside these limits.
If the time runs out, the goods are treated as supplied by you on the day you originally sent them. That means tax on a sale you never made, plus interest from that date.
Take the fabric from the opening. Say you trade in fabric in Surat and send 4,000 metres of grey fabric at ₹60 a metre, ₹2,40,000 in all, to a dyeing house on challan DC/26-27/087 dated 5 November 2026. You have until 4 November 2027. If 300 metres are still unaccounted for after that, ₹18,000 of fabric (300 × ₹60) is treated as supplied on 5 November 2026, and you pay GST on it at the applicable rate with interest from that date.
A short monthly routine prevents this:
List open job work challans with send date, quantity sent and quantity received back.
Flag any challan older than nine months for inputs, or 33 months for capital goods.
Match the job worker's return challans against yours, including process loss you have agreed in writing.
Close each challan in your books once the balance is nil.
The same data feeds Form ITC-04, the job work statement. If your aggregate turnover in the previous year was above ₹5 crore, you file it half-yearly, by 25 October and 25 April. If it was ₹5 crore or less, you file it once a year, by 25 April. Open challans with no return entries are the first thing a reviewer will look for.
Branch transfers and goods on approval: challan or invoice?
This is where most mistakes happen, and the answer depends on the GSTIN.
Moving stock between two godowns registered under the same GSTIN is not a supply. A delivery challan is correct. Moving stock to your own branch in another State, which has its own GSTIN, is a supply between distinct persons under GST even though no money changes hands. That needs a tax invoice, and the receiving branch takes the credit. If you run several locations, keep this rule in your billing setup so staff cannot pick the wrong document. Our page on multi-location accounting shows how branch transfers are handled in hisabkitab.
Goods sent on approval, common with jewellers, furniture and machinery dealers, move on a challan. Circular No. 10/10/2017-GST confirms this and says the invoice can be issued when the supply is finalised at delivery. Section 31(7) of the CGST Act puts a limit on it: the invoice is due when the buyer accepts the goods or six months from the date of removal, whichever is earlier. An approval challan that stays open for seven months has become a sale on paper.
Where delivery challans show up in GSTR-1
The "Documents issued" table in GSTR-1 lists delivery challans in separate rows: for job work, for supply on approval, for liquid gas, and for other movements not by way of supply. For each you report the serial range, total number, cancelled and net issued.
For example, if your job work series ran from DC/26-27/081 to DC/26-27/095 in November and two were cancelled, you report 15 issued, 2 cancelled and 13 net. Gaps in the series with no cancellation record are what a reviewer questions, which is why a dedicated, consecutive series per challan type is worth the small setup effort.
Where hisabkitab fits in
hisabkitab lets you generate the e-way bill from the same place you raise the bill, so the document number, HSN code and value on the e-way bill match what you issued. With custom invoicing you can carry HSN or SAC codes, QR codes and your branding on your documents, and multi-location stock with branch transfers keeps same-GSTIN movements separate from inter-State transfers.
Your audit trail records who created or changed each document, and the GST reports give you one view of what went out and what was billed. Read more on our e-way billing software page.
Frequently asked questions
Is a delivery challan mandatory under GST?
It is mandatory when goods move without an invoice in the cases Rule 55 covers, such as job work, liquid gas, approval sales and movements that are not a supply. If you are making a normal sale, you need a tax invoice instead.
Can a delivery challan replace a tax invoice?
Only temporarily. Where goods move for supply on a challan, the tax invoice must still be issued, after delivery under Rule 55(4) or before the first lot under Rule 55(5).
Does a delivery challan need an e-way bill?
Yes, if the consignment value is above ₹50,000 or the goods go to a job worker in another State, whatever the value. Select "Delivery Challan" as the document type on the e-way bill.
Is GST charged on a delivery challan?
No tax is paid on the challan itself. Rule 55 asks you to show the tax rate and amount where the goods are moving for supply, but the liability arises on the invoice.
Do delivery challans need an IRN under e-invoicing?
No. E-invoicing applies to invoices, credit notes and debit notes. A challan is reported in the documents issued table of GSTR-1 and, where needed, on an e-way bill.
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