Delivery Challan Under GST (Rule 55): When You Need One and What It Must Show
Not every movement of goods is a sale. You might send raw material to a job worker, ship machines to a customer on approval, or move stock to an exhibition. In each case the goods are on the road, but there is no sale yet, so there is nothing to put on a tax invoice.
For these situations GST provides a delivery challan. This guide explains when Rule 55 of the CGST Rules requires one, what it must contain, and how it works with the e-way bill.
What is a delivery challan?
A delivery challan is a document that goes with goods when they are transported for a reason other than a completed sale, or when the final invoice cannot yet be issued. It records what is being moved, from whom, to whom and why. It is not a demand for payment, and it does not by itself create a tax liability.
When does Rule 55 allow a delivery challan?
A delivery challan can be issued instead of an invoice in these situations:
- Supply of liquid gas where the quantity at the time of removal is not known.
- Transportation of goods for job work, such as sending fabric to a dyer or parts to a machining unit.
- Transportation of goods for reasons other than supply: for example, moving stock between your own godowns in the same state, sending goods for repair, sending goods to an exhibition, or returning borrowed equipment.
- Goods sent on approval or on a sale-or-return basis.
- Goods sent in completely or semi-knocked-down condition in several lots, where the full invoice is issued before the first lot and a challan goes with each lot.
- Any other supply that may be notified.
What a delivery challan must contain
Rule 55 requires these particulars:
- Date and number of the delivery challan.
- Name, address and GSTIN of the consignor (the sender), if registered.
- Name, address and GSTIN or UIN of the consignee (the receiver), if registered.
- HSN code and description of goods.
- Quantity. A provisional quantity is fine where the exact figure is not known, as with liquid gas.
- Taxable value.
- Tax rate and tax amount (CGST, SGST, IGST, UTGST or cess), where the transportation is for supply to the consignee.
- Place of supply, in the case of inter-state movement.
- Signature.
The challan number follows the same rules as invoice numbers: consecutive, not more than 16 characters, and unique for the financial year. Use a separate series, such as DC/26-27/001, so challans and invoices do not collide. See our guide on numbering rules.
Three copies
For goods, the challan is prepared in triplicate:
- Original: for the consignee.
- Duplicate: for the transporter.
- Triplicate: for the consignor.
Delivery challan and the e-way bill
A delivery challan does not replace the e-way bill. If the movement requires an e-way bill under Rule 138, you generate it with the challan as the reference document. The general threshold is a consignment value above 50,000, but some states have different limits for intra-state movement, and job work movements have their own rules. When an e-way bill is generated, the challan number and date go into it.
A practical point: the "value" on a challan for job work or repair is still important, even though no sale happens, because officers check it against the e-way bill.
Goods sent on approval: the six-month rule
When goods go out on approval or sale-or-return, the challan travels with them. If the buyer accepts the goods, you issue a tax invoice at that point. If the goods are neither accepted nor returned within six months of removal, they are treated as supplied, and a tax invoice must be issued (Section 31(7)).
Job work: one year and three years
Inputs sent to a job worker under a challan must come back within one year, and capital goods within three years (Section 143). If they do not, the original removal is treated as a supply on the day the goods were sent, and tax with interest becomes due. Moulds, dies, jigs and tools sent to a job worker are not covered by this time limit.
Delivery challan vs tax invoice vs delivery note
| Tax invoice | Delivery challan | |
|---|---|---|
| Purpose | Records a sale and the tax charged | Covers movement of goods without, or ahead of, a sale |
| Asks for payment | Yes | No |
| Buyer claims ITC on it | Yes | No |
| Legal basis | Section 31, Rule 46 | Rule 55 |
Outside India, the same document is usually called a delivery note. It serves the same practical purpose, but without the GST-specific fields.
Common mistakes
- Using a tax invoice for stock transfers within the same GSTIN. Moving goods between your own branches in the same state is not a supply. Use a challan.
- Missing value or HSN. Without them, the e-way bill cannot be matched.
- Forgetting to close the loop. For goods on approval or job work, track the return dates so you do not end up with an unexpected tax liability.
- No signature. The challan is a legal document, so sign it.
Make a delivery challan online
The OwnInvoice delivery challan generator is set up for Indian businesses. It has GSTIN fields for the consignor and consignee and a quantity for each item, and you can add custom fields for the purpose of movement or the e-way bill number. Put the HSN code in each item's description. It prints with no payment section. If the goods are later sold, create the matching tax invoice in the Invoice Studio.
Note: This is general information, not legal advice. E-way bill thresholds and job work provisions vary by state and change over time; confirm the current rules with your tax adviser.