An overview of delivery challans: GST requirements, formats, and more

Ever found yourself in a situation where you had to transport goods from one place to another, for reasons other than sale—like sending free samples to win over your customers or simply transferring stock from the warehouse to the store? If you have, then you probably realized that you can't send a tax invoice with such consignments. You'll need the official travel pass: the delivery challan.

What is a delivery challan?

For businesses involved in the supply chain, logistics isn't just a supporting function, but an essential one; transporting goods with proper documentation is a necessity. Without the right documents in place, such transit could lead to unwanted penalties, confiscation of goods, and even worse, a delay in operations. This is where a delivery challan helps businesses streamline movements without breaking the rules.

Put simply, a delivery challan is a formal document that outlines the details of the goods being transported. This includes any information related to the goods being moved, such as the description of the goods, the quantity being sent, the delivery address, and similar details. Since the transit doesn't involve a sale, no GST is applied, thus no input credits can be claimed.

When do you issue a delivery challan?

A delivery challan is typically issued when you have to transport goods, but the movement doesn't actually result in an immediate sale. For example, a fashion boutique sends all its finished garments to a third-party dyer to add colors and patterns. Since the movement of goods is temporary (which will be sent back once dyed) and doesn't result in a sale, the boutique doesn't send a tax invoice. Instead, it issues a delivery challan.

A delivery challan not only helps businesses track goods in transit, but also ensures compliance with GST regulations. Below are common situations where a delivery challan is required.

• Supply on approval
  There are situations where businesses send goods for testing, inspection, or approval before finalizing a sale.
• Goods transported for job work
  Sometimes, businesses will have to transport goods for processing or manufacturing.
• Goods transported for exhibition or stock transfer
  Whenever goods are transported to be exhibited (For example, showcasing products in trade shows) or moved from the warehouse to a store or a branch, a delivery challan is used.
• Return of goods
  If the goods sent are returned to the supplier, a delivery challan is issued to transport these goods.

What is the GST delivery challan format?

A GST delivery challan typically contains the following information:

• A unique serial number to identify each delivery challan
• The name, address, and GSTIN of the supplier
• The name, address, and GSTIN of the receiver
• Place of supply
• A detailed specification of what goods are being transported
• Quantity of the goods being transported
• A clear breakdown of the tax value
• HSN codes of the goods being transported
• A signature to authorize the transport

Do I need to generate an e-way bill for a delivery challan?

An e-way bill or an electronic way bill is a document generated on the GST portal that authorizes the movement of goods. If the goods transported are more than Rs. 50,000 in value, GST-registered businesses should generate an e-way bill. This is irrespective of the transit yielding a sale or not.

How to generate a delivery challan

A delivery challan can be created using several methods. You can use a delivery challan template available on the internet to create one, create one manually, or use billing software. Although creating delivery challans manually might seem straightforward, it often leads to errors, delays, and compliance risks. Using an online billing software like Zoho Billing can avoid issues and help your business.

Zoho Billing is a robust billing management software that lets you create delivery challans and generate e-way bills in just a few clicks. It doesn't stop there—it also streamlines invoicing, automates subscription management, and simplifies payment collection. For businesses that regularly move goods, staying compliant is essential. Zoho Billing streamlines the entire process, so you can focus less on paperwork and more on growing your business. Sign up now, and start generating GST-compliant delivery challans and e-way bills.