A delivery challan under GST is a document used to move goods from one place to another when the movement is not a sale, so no tax invoice is raised. Issued under Rule 55 of the GST rules, it covers cases like sending goods for job work, supply on approval, or transport where the quantity or value is not yet known. It lets goods move legally without charging GST on that movement. This article explains when to use one, how it differs from a tax invoice, its mandatory fields, and how it links to the e-way bill.
What is a delivery challan?
A delivery challan is a transport document issued under Rule 55 of the GST rules to move goods without a sale taking place. It travels with the goods in place of a tax invoice when there is no supply, no tax is charged, and ownership is not changing at that point.
When must you use a delivery challan?
Rule 55 lists the specific situations where goods move on a delivery challan rather than a tax invoice. The common cases are:
Job work
When you send raw material or semi-finished goods to a job worker for processing — say a Ludhiana textile unit sending fabric for dyeing — the goods move on a delivery challan, since you are not selling them.
Supply on approval
When goods are sent on a sale-or-return basis and the buyer may or may not keep them, a delivery challan carries them. The tax invoice is raised only when the buyer confirms the purchase.
Transport without a known supply value
When goods are moved but the quantity or value is not known at dispatch, such as liquids or bulk goods supplied in stages, a delivery challan is used. It also covers stock transfers between your own branches and movement of goods in multiple shipments.
Delivery challan vs tax invoice
Both move goods, but they mark very different events. Here is the comparison:
- Purpose: a tax invoice records a sale; a delivery challan records a movement of goods without a sale.
- Tax charged: a tax invoice shows GST; a delivery challan generally shows no GST, only the value of goods for reference.
- Transfer of ownership: ownership passes on a tax invoice; with a delivery challan, ownership usually stays with the sender.
- Input tax credit: a buyer can claim credit on a tax invoice; a delivery challan does not by itself support a credit claim.
For how a real sale document is structured, see our GST invoice format guide.
What are the mandatory fields on a delivery challan?
A delivery challan has its own set of required fields under Rule 55. It should carry:
- Date and a serial number of the challan.
- Name, address, and GSTIN of the consigner (sender).
- Name, address, and GSTIN or UIN of the consignee (receiver), where registered.
- HSN code and description of the goods.
- Quantity of the goods, fully or provisionally where the exact amount is not known.
- Taxable value of the goods, and the tax rate and amount where applicable.
- Place of supply for inter-state movement, and the signature of the sender.
The challan is generally prepared in triplicate — for the consignee, the transporter, and the consigner. Confirm the current Rule 55 fields on https://cbic-gst.gov.in.
How a delivery challan connects to the e-way bill
When goods move on a delivery challan and the consignment value crosses the e-way bill threshold of ₹50,000, you still need an e-way bill. In that case, the delivery challan becomes the source document for the e-way bill instead of a tax invoice.
While generating the e-way bill, you enter the challan number and date in Part A and select a reason for transport such as job work or supply on approval, rather than a normal supply. This keeps the document trail consistent — the challan describes the goods, and the e-way bill authorises the movement. For the full mechanics, see our complete e-way bill guide. Because thresholds and conditions can change, confirm the current rules on https://cbic-gst.gov.in before dispatch. If you are also unsure when to use a non-tax document over an invoice, our guide on the bill of supply vs tax invoice covers the related distinction.
Job work, branch transfers, and approval sales all need clean challans that link back to your invoices and e-way bills. Use our free invoice generator to create correct GST documents in minutes, and keep your goods moving without paperwork errors at the checkpost.
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Invodo Editorial
Reviewed by a Chartered Accountant
The Invodo editorial team writes practical, India-specific guides on GST and business finance. Compliance content is reviewed by a practising Chartered Accountant.
