GST glossary
Delivery challan
A delivery challan is the document that travels with goods when they are moved without a tax invoice, for example to a job worker, on approval, or between your own locations. It lists the goods and their value so the movement is legal, and it is not a sale.
Why it matters to your business
Goods on the road must always have a document. If a vehicle is stopped and the goods have neither an invoice nor a challan, they can be detained and a penalty charged. A delivery challan also keeps your stock records right: you know what has left your premises, where it is and what is due back.
How it works
As of October 2026:
- Rule 55 of the CGST Rules allows a delivery challan for job work, goods sent on approval, movement that is not a supply, and supplies where the quantity is unknown at removal.
- It carries a serial number of up to 16 characters, the date, the sender’s and receiver’s name, address and GSTIN, the HSN code, description, quantity and taxable value, and the signature. Tax is shown only where the movement is itself a supply.
- An e-way bill is needed above the limit, as for an invoice.
- When a sale follows, you issue a tax invoice that refers to the challan.
- A transfer to your branch in another state, under a different GSTIN, is a taxable supply and needs a tax invoice, not a challan.
An example
A Ludhiana hosiery maker sends 500 kilos of knitted fabric worth ₹1,50,000 to a dyeing unit in the same city. No sale takes place, so the fabric travels on a delivery challan with an e-way bill. When the dyed fabric returns, the dyer’s own challan and job work invoice come with it.
Common mistakes
- Sending goods to another state branch on a challan instead of a tax invoice.
- No e-way bill because “it is only a challan”.
- Not invoicing goods on approval that the customer has kept.
- Losing track of material lying with job workers.
Questions about Delivery challan
When is a delivery challan used instead of an invoice?
When goods move but there is no sale at that moment. The usual cases are goods sent for job work, goods sent on approval, a transfer between your own warehouses under the same GSTIN, and supplies where the quantity is not known when the goods leave.
Is an e-way bill needed with a delivery challan?
Yes, if the value is above the e-way bill limit. The e-way bill is generated against the challan number, with the reason for transport.
How many copies of a delivery challan are made?
Three. The original goes with the goods for the receiver, the duplicate is for the transporter, and the triplicate stays with you.
How long can goods stay out on approval?
Up to six months. If the customer has not accepted them by then, GST becomes due and you must issue a tax invoice.
Updated .