What is a delivery challan?
A delivery challan is a document that accompanies goods when they move from one place to another and the transaction is not yet complete enough to raise a tax invoice. It records what goods are being sent, in what quantity, and where they are going, without acting as a final sale document.
Think of it as a movement note. The goods leave your premises with a challan. The invoice comes later, once the supply is confirmed, the goods are approved, or the job is done.
When does GST law require a delivery challan?
Rule 55 of the Central Goods and Services Tax Rules, 2017 lists the specific situations where a delivery challan is required instead of a tax invoice:
Supply of liquid gas: When the quantity being supplied cannot be determined at the time of dispatch, for example, a tanker of gas where the exact quantity is measured at the destination.
Goods sent on approval: When you send goods to a customer who has not yet decided whether to buy them. The challan accompanies the goods; the invoice comes only if and when the customer agrees to take them.
Goods sent for job work: If you are sending raw materials or semi-finished goods to a job worker for processing, a delivery challan covers that movement. The finished goods return under a separate challan.
Movement to own branches or consignment agents: If you are transferring stock between your own locations, or sending goods to a consignment agent who will sell them on your behalf, there is no sale at the point of dispatch. A delivery challan documents the movement.
Any other case notified by the government: The rules allow the government to add situations to this list by notification.
Outside these categories, if you are making a taxable supply and the goods are leaving your premises, you generally need a tax invoice, not a challan. A challan is not a substitute for an invoice on a completed sale.
What a delivery challan must contain
Rule 55(2) of the CGST Rules, 2017 prescribes the mandatory fields:
Serial number: A consecutive serial number, not exceeding 16 characters, within the financial year. Running a distinct series for challans (for example, DC/2026-27/001) keeps them separate from your invoice numbering.
Date of issue: The date the challan is prepared, not the date of delivery.
Consignor details: Your name, address, and GSTIN.
Consignee details: The name and address of the person receiving the goods. If the consignee is GST-registered, their GSTIN goes here too.
HSN code: The Harmonised System of Nomenclature code for the goods being transported. The number of digits required depends on your annual turnover, consistent with the requirement on your tax invoices.
Description of goods: A clear description of what is being sent.
Quantity: The quantity dispatched. If the quantity is not ascertainable at the time of dispatch (for example, for liquid gas), you state that it is to be determined at delivery.
Taxable value: The value of the goods for the purpose of determining whether an e-way bill is needed.
GST rate and tax amount: The applicable CGST, SGST, or IGST rates and amounts, or a statement that GST is not applicable to this movement.
Place of supply: Where the goods are going, which determines whether CGST and SGST or IGST applies.
Signature: The signature of the authorised signatory.
E-way bill number, if applicable: If the consignment value exceeds the threshold for e-way bill generation (currently set by Rule 138 of the CGST Rules, 2017, though the threshold can change), the e-way bill number is noted on or alongside the challan.
How many copies?
The CGST Rules specify three copies:
The original goes to the consignee. The duplicate accompanies the goods as the transporter's copy. The triplicate stays with the supplier.
If you are using digital challans, you may not need physical triplicates, but the principle holds: the consignee, the transporter, and the supplier should each have a record.
When you do NOT need a delivery challan
Not every movement of goods requires a delivery challan:
If you are dispatching goods against a completed sale and you are raising a tax invoice at the time of dispatch, the invoice accompanies the goods. No separate challan is needed.
For small intra-city movements where no e-way bill is required and the transaction is a straightforward taxable supply, the tax invoice is the correct document.
For goods returned to you by a customer, the customer should issue a delivery challan or a return note, not the supplier.
A delivery challan format
Here is a standard format based on Rule 55 of the CGST Rules, 2017:
[Your business name] [Address] [GSTIN]
DELIVERY CHALLAN
No: DC/2026-27/[sequential number] Date: [DD-MM-YYYY]
Consignee: [Name] [Address] [GSTIN, if registered]
Vehicle number: [MH12AB1234 or similar]
E-way bill number: [if applicable]
| HSN | Description | Qty | Unit | Taxable value | GST rate | Tax amount |
|---|---|---|---|---|---|---|
| [code] | [goods] | [qty] | [unit] | [value] | [rate]% | [amount] |
Total taxable value: Rs [amount] Total tax: Rs [amount] Total: Rs [amount]
Place of supply: [State] Reason for issue: [Job work / Goods on approval / Branch transfer / other]
Authorised signatory: ________________
The link between delivery challan and e-way bill
A delivery challan and an e-way bill are related but different. The challan is the document describing what goods are moving and why. The e-way bill is a compliance requirement triggered by consignment value: if the value of goods being moved exceeds the applicable threshold, an e-way bill must be generated on the GST portal before the movement begins.
The e-way bill number is then recorded on the delivery challan. If no e-way bill is required (for example, because the consignment value is below the threshold, or because the movement is explicitly exempt), that field on the challan stays blank.
What happens if you move goods without a delivery challan?
Goods in transit without proper documentation can be detained by a GST officer under Section 68 of the CGST Act, 2017. The officer can ask for the challan, the tax invoice, and the e-way bill where applicable. If these are not available, the officer has the power to detain the goods and the vehicle.
The penalty for moving goods without documentation is set out in Section 129 of the CGST Act. It is not a small amount. The practical cost of being stopped and having goods detained, especially for perishables or time-sensitive deliveries, is even higher.
How billing software handles delivery challans
The benefit of using billing software for challans is the same as for invoices: sequential numbering happens automatically, the GST rates and HSN codes come from your item catalogue, and you have a searchable record of every movement.
When the challan converts to an invoice, a good system links the two documents, so you can see the full history of a consignment from dispatch to invoice to payment. That connection matters when a customer disputes what was sent, or when an auditor wants to trace a supply chain.
The challan is not a glamorous document. But it is the one that keeps goods moving without legal complications, and getting its format right costs almost nothing compared to the cost of getting stopped at a checkpoint.