Delivery Challan

A delivery challan is an official document issued by a GST-registered supplier to transport goods from one location to another when no tax invoice is required at the time of movement. Also called a dispatch slip or delivery slip, it acts as proof of goods in transit without transferring ownership or creating a tax liability. Under Rule 55 of the CGST Rules 2017, a delivery challan is issued in specific situations where goods move but a sale has not yet happened, such as sending goods for job work, transferring stock between warehouses, or dispatching goods on an approval basis. A delivery challan does not replace a tax invoice. Once the goods are sold or supplied, a proper GST tax invoice must be raised separately.

Quick reference

Also known as	Dispatch slip, delivery slip, dispatch challan
Governed by	Rule 55 of the CGST Rules 2017
When issued	When goods move without a sale or supply
Creates tax liability	No
Can be used to claim ITC	No
Must be issued in	Three copies (triplicate)
Copy distribution	Original to consignee, duplicate to transporter, triplicate retained by consignor
Serial number limit	Maximum 16 characters, consecutive for the financial year
E-way bill required	Yes, if goods value exceeds Rs. 50,000

How a delivery challan works

Here is how a delivery challan flows from the supplier to the final destination:

1. Goods need to move but a sale has not happened yet. A clothing manufacturer in Tirupur needs to send fabric rolls to an embroidery unit in Coimbatore for job work. No sale is taking place. The fabric will come back after processing.

2. The supplier issues a delivery challan. The manufacturer creates a delivery challan with the details of the fabric, the quantity, the consignee address, and the HSN code. The challan is printed in three copies.

3. Three copies are distributed. The original copy goes with the goods to the embroidery unit. The duplicate copy goes to the transporter for their records. The triplicate copy is retained by the manufacturer for their own books.

4. Goods travel with the delivery challan. The truck carrying the fabric is accompanied by the delivery challan and, if the value of goods exceeds Rs. 50,000, an e-way bill generated on the GST portal.

5. The job work is completed and goods return. When the embroidery unit sends the processed fabric back to the manufacturer, another delivery challan is issued for the return journey.

6. A tax invoice is raised after the goods are sold. When the manufacturer eventually sells the finished garments to a buyer, a proper GST tax invoice is raised at that point. The delivery challan is not used as a billing document.

Delivery challan example for Indian businesses

Vikram runs a furniture manufacturing unit in Rajkot, Gujarat. He sends 20 semi-finished chair frames to a wood polishing unit in Rajkot for surface treatment. No sale is happening. The chair frames will return after polishing.

Vikram issues a delivery challan with:

• Consignor: Vikram Furniture Works, Rajkot, GSTIN: 24XXXXX
• Consignee: Shree Polish Works, Rajkot, GSTIN: 24YYYYY
• Goods: 20 chair frames (semi-finished), HSN 9401
• Quantity: 20 units
• Taxable value: Rs. 40,000 (provisional)
• Challan number: DC/2026-27/001
• Date: 1st April 2026

Since the taxable value is below Rs. 50,000, no e-way bill is required for this movement. The polishing unit receives the frames, does the work, and returns them with a fresh delivery challan from their end. Vikram then raises a final GST tax invoice to the buyer when the completed chairs are sold.

When must a delivery challan be issued in India

Under Rule 55(1) of the CGST Rules 2017, a delivery challan must be issued in place of a tax invoice in the following situations:

Transportation for job work

When a principal sends goods to a job worker for processing, testing, repair, or any treatment, a delivery challan is required. This applies to movement from the principal to the job worker, between one job worker and another, and from the job worker back to the principal. This is one of the most common uses of delivery challans in Indian manufacturing.

Supply of liquid gas where quantity is unknown

When liquid gas (such as LPG or CNG) is dispatched from the supplier's premises and the exact quantity at the time of removal is not yet known, a delivery challan is issued with a provisional quantity. A final tax invoice is issued once the actual quantity is confirmed at the buyer's end.

Goods transported before sale (approval basis)

When goods are sent to a buyer on an approval or sale-or-return basis, the buyer has the option to accept or return them. Since the sale is not confirmed at the time of dispatch, a delivery challan accompanies the goods. If the buyer accepts the goods, a tax invoice is then raised.

Goods moved between warehouses or branches

When a business transfers stock between its own warehouses, godowns, or branches within the same state or across states, a delivery challan documents the movement. No tax invoice is required since no sale is occurring.

Goods sent abroad for exhibitions or promotions

Under CBIC Circular No. 108/27/2019-GST dated 18th July 2019, if goods are sent outside India for a trade exhibition, fair, or promotional event and are expected to return, this movement is neither a supply nor an export. A delivery challan must accompany such goods. No LUT or bond is required.

Multiple shipments of the same invoice

When goods covered by a single invoice are transported in multiple shipments, a complete tax invoice is issued with the first consignment. For every subsequent shipment, a delivery challan is issued referencing the original invoice number.

When a tax invoice cannot be issued at the time of removal

If goods need to move urgently and the tax invoice cannot be prepared in time, the supplier may issue a delivery challan at the time of removal and follow up with the tax invoice after the goods are delivered.

What a delivery challan must contain

Under Rule 55(1) of the CGST Rules 2017, every delivery challan must include the following mandatory details:

• Date and serial number of the delivery challan (maximum 16 characters, consecutive series for the financial year)
• Name, address, and GSTIN of the consignor (the sender)
• Name, address, and GSTIN or Unique Identification Number of the registered consignee, or name, address, and place of supply if unregistered
• HSN code of the goods being transported
• Description of goods, quantity, and unit of measure
• Taxable value of the supply (can be provisional if actual value is not yet known)
• GST rate and the tax amount split into CGST, SGST, IGST, and cess if applicable, where transportation is for supply
• Place of supply in case of inter-state movement
• Signature or digital signature of the supplier or their authorised representative

Delivery challan vs tax invoice vs e-way bill

All three documents are used during the movement of goods but they serve very different purposes:

	Delivery challan	Tax invoice	E-way bill
Purpose	Documents movement of goods without a sale	Records a completed sale and demands payment	Electronic permit for transporting goods above Rs. 50,000
When required	Goods moving without a supply	Goods being sold or supplied	For any taxable goods movement above the threshold
Creates tax liability	No	Yes	No
ITC claimable	No	Yes	No
Format prescribed	No, but mandatory fields apply	Yes, under GST rules	Yes, generated on GST portal
Generated on GST portal	No, issued by supplier	No, issued by supplier	Yes, mandatory

Important for traders and manufacturers: A delivery challan and an e-way bill are not alternatives. When goods are transported on a delivery challan and their value exceeds Rs. 50,000, you must also generate an e-way bill on the GST portal. The delivery challan handles the record-keeping. The e-way bill handles the transit compliance. Both are needed together for high-value movements.

Types of delivery challans

Job work delivery challan

The most common type. Used when goods are sent from a principal to a job worker and back. Textile mills, auto component manufacturers, electronics assemblers, and printing businesses use these regularly.

Stock transfer delivery challan

Used when goods move between two locations of the same business, such as from a factory to a warehouse, or from one branch to another. No ownership changes hands.

Returnable delivery challan

Used when goods are sent temporarily and expected to return, such as containers, packaging materials, display items, or equipment sent on loan.

Sales return delivery challan

Used when a buyer is returning goods to the seller. The buyer issues this to document the reverse movement of goods back to the supplier.

Supply on approval delivery challan

Used when goods are dispatched on a trial or approval basis. The buyer inspects the goods and then decides whether to buy them.

Common delivery challan mistakes Indian businesses make

• Not issuing a delivery challan for job work movements. Many small manufacturers in India send goods to job workers without any documentation. Under GST, every goods movement must be documented. Sending goods for job work without a delivery challan can result in the goods being treated as a supply, triggering unintended tax liability.

• Using a delivery challan instead of a tax invoice. A delivery challan cannot replace a tax invoice when a sale has occurred. If goods have been sold, a proper GST tax invoice must be raised. Using only a delivery challan for completed sales is non-compliant and denies the buyer the ability to claim ITC.

• Not generating an e-way bill alongside the challan. When the goods being transported on a delivery challan are valued above Rs. 50,000, an e-way bill is mandatory. Many businesses issue a delivery challan but forget the e-way bill, making the consignment liable to detention by tax authorities during transit.

• Not maintaining triplicate copies. Rule 55(2) of the CGST Rules requires delivery challans to be issued in three copies with specific markings. Creating only one copy or not labelling them as original, duplicate, and triplicate is a compliance gap.

• Leaving the quantity as provisional and never converting to a final tax invoice. When goods like liquid gas are dispatched with a provisional quantity, a final tax invoice must be issued once the actual quantity is confirmed. Businesses sometimes forget this step and leave the delivery challan as the only record.

Frequently asked questions

What is a delivery challan under GST?

A delivery challan is a document issued under Rule 55 of the CGST Rules 2017 to accompany goods being transported without a tax invoice. It is used when goods are moving but not being sold, such as for job work, stock transfers, or goods sent on approval. It does not create a tax liability and cannot be used to claim Input Tax Credit.

Is a delivery challan mandatory under GST?

Yes, in specific situations a delivery challan is mandatory. When goods are transported without a tax invoice, such as for job work, warehouse transfers, or goods sent on approval, Rule 55 of the CGST Rules 2017 requires that a delivery challan accompany the goods. Moving goods without either a tax invoice or a delivery challan is non-compliant.

Can I claim Input Tax Credit on a delivery challan?

No. Input Tax Credit can only be claimed on a valid GST tax invoice. A delivery challan does not represent a sale or supply, so no GST is charged on it and no ITC can be claimed. Once the goods are eventually sold and a tax invoice is raised, the buyer can claim ITC on the invoice.

Do I need an e-way bill if I have a delivery challan?

Yes, if the value of goods being transported on the delivery challan exceeds Rs. 50,000. A delivery challan handles the document record for the movement. An e-way bill is a separate electronic compliance requirement on the GST portal for goods above the value threshold. Both are required together for high-value movements.

How many copies of a delivery challan are required?

Under Rule 55(2) of the CGST Rules 2017, a delivery challan must be issued in triplicate. The original copy is for the consignee, the duplicate is for the transporter, and the triplicate is retained by the consignor for their own records.

Related terms

Tax Invoice · GST Invoice · Bill of Supply · E-Way Bill · Job Work · Input Tax Credit · Debit Note

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