A delivery challan is an important document for all the businesses taking part in the exchange of goods and services. If you’re a new business owner and want to know about the delivery challan and its significance, then you’re in the right place! Read the below section to know more!

What Exactly Is A Delivery Challan?

A delivery challan plays a very important part in everyday communication between a buyer and a supplier or service provider. Section 31 of the CGST Act states that an individual who is entitled to transport taxable goods and services must have an invoice containing the details of the transaction like the quantity and price of the items.

In a similar way, for transporting or shipping goods, a delivery challan is required. It is quite similar to an invoice but still has many differences and purposes.

Sometimes, a delivery challan is also known as a dispatch or a delivery slip which is a more formal piece of document that contains all the required details about the shipment such as the quality, material description, quantity and the associated price.

This document also holds other details such as the delivery location, supplier name and address and delivery time as well. Overall, a delivery challan is an indispensable document required to be shipped along with the goods and services from one location to another.

Process of Issuing A Delivery Challan

As per section 55 (2) of CGST regulations, a delivery challan should be generated in three copies for at least three parties involved in the transaction. Moreover, if required, an additional fourth copy can also be created for the same. Here is the breakdown :

  • An original copy should be sent to the buyer
  • A duplicate copy should be sent to the transporter
  • A triplicate copy for the seller
  • The fourth additional copy can be made for the accounts department for better handling of transactions.

What is Delivery Challan Format

After understanding what a delivery challan is and when it is used, the next important thing to understand is the delivery challan format. Let’s learn about it in detail!

So, the delivery challan format is an outline of content that should be mandatorily there in a challan. The format is simple but needs to be followed by each and everyone issuing a delivery challan.

Typically, there are a few areas of or say, features that need to be there in the delivery challan format, let’s break it down for better understanding:

  • The data of the issue
  • Serial number of document
  • Name and contact number of the registered supplier
  • Quantity of the goods along with the other details such as product description, HSN number, etc.
  • Name, address and contact number of the transporter
  • Destination address
  • Digital signature

To generate and issue an error-free delivery challan, it is important to include all the above-mentioned details outlined in the delivery challan format. Make sure to include all the details, the HSN number, taxable number along with the GST details.

Out of all the contents of the delivery challan format, the registration number plays a very important role as it helps in matching the issuer to the customer.

7 Factors To Know Which Businesses Needs To Issue A Delivery Challan

There are certain instances where businesses and entities are required to issue a delivery challan as an indispensable piece of document. Here are the seven areas where a supplier should issue a delivery challan :

When The Goods Are Shipped on Approval Basis

If the goods are being transported or received within or between the states or union territory on approval for return or sales basis and are discarded before the actual supply takes place, Delivery Challan should be issued with the shipment itself.

Shipping Artwork To Galleries

Artists transport their artworks to multiple galleries for either sale or exhibition purposes from these destinations. If the artwork is successfully sold to a buyer, then it will be transported to any location within or outside the state along with a delivery challan.

Transporting Goods Outside The Country For Promotion or Exhibition

As per circular number 108/27/2019-GST by CBIC, if the goods are sent outside the country for the purpose of export promotion or exhibition, then these consignments don’t come under a supply or export basis. Therefore, there is no need for a bond or LUT and instead, a delivery challan is sent along with them.

Transporting Goods In Multiple Shipments

When the goods are sent in the form of multiple shipments, then the supplier is required to issue the invoice prior to dispatching the first shipment and it shall be then followed by a delivery challan for each of the remaining consignments, as a reference to the invoice.

When Invoice Can Not Be Issued At The Time of Departure

When the tax invoice can’t be issued at the time of removal, then the delivery challan can be issued with the shipment and the invoice can be issued after the delivery.

E-way /GST Bill

When the tax invoice or e-way bill is not required, then the delivery challan must be sent along with the shipment.

When Goods Are Prone to Damage

When the goods are fragile and prone to damage, a delivery challan should be sent along with them as an evidential document regarding the supply.

While a delivery challan is an important commercial document, it is not required by each and every business. But there are certain situations, where it becomes indispensable and hence must be issued by the seller.

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