A delivery challan under GST is a document issued under Rule 55 of the CGST Rules to move goods without a tax invoice, for job work, liquid gas of unknown quantity, movement not by way of supply (such as stock transfers for exhibitions or approval), and other notified cases. It must carry serial number, date, parties, HSN, quantity, value and tax details, and is prepared in triplicate.
Not every movement of goods is a sale. Raw material goes to a job worker, a demo unit goes to a trade fair, a tanker leaves with LPG before the exact quantity is known. For these cases GST allows goods to move on a delivery challan instead of a tax invoice.
Rule 55 of the CGST Rules sets out when a challan is allowed, what it must contain and how many copies to print. This guide covers all of that, explains the link to e-way bills, and shows worked examples. Movement for job work is explored further in e-way bill for job work.
When can goods move on a delivery challan?
Rule 55(1) lists four cases where the consigner may issue a delivery challan in lieu of an invoice at the time of removal:
| Case | Rule 55(1) clause | Typical examples |
|---|---|---|
| Liquid gas where quantity at removal is not known | (a) | LPG, oxygen, nitrogen tankers |
| Transportation of goods for job work | (b) | Fabric to a dyer, castings to a machinist |
| Transportation for reasons other than supply | (c) | Goods for exhibition, goods sent on approval, repairs, returnable packaging, own-use movement |
| Other supplies notified by the Board | (d) | As notified |
Two further situations are covered by Rule 55(4) and 55(5):
- Invoice could not be issued at removal for goods moving for supply: the supplier must issue the tax invoice after delivery.
- Goods in SKD/CKD condition or in batches or lots: the full invoice is issued before the first consignment, and each later consignment moves on a delivery challan referring to that invoice.
What fields must a delivery challan contain?
Rule 55(1) lists nine particulars:
- Date and number of the delivery challan (serially numbered, max 16 characters, one or multiple series)
- Name, address and GSTIN of the consigner, if registered
- Name, address and GSTIN or UIN of the consignee, if registered
- HSN code and description of goods
- Quantity (provisional, where the exact quantity is not known)
- Taxable value
- Tax rate and tax amount (CGST, SGST, IGST, UTGST or cess), where the transportation is for supply to the consignee
- Place of supply, for inter-state movement
- Signature
Note item 7: if the movement is not a supply (job work, exhibition, approval), you show value but not tax. Use a separate series such as DC/26-27/0001; see GST invoice number series rules.
How many copies of a delivery challan are needed?
Rule 55(2) says that in the case of supply of goods, the challan is prepared in triplicate:
| Copy | Marking | Who keeps it |
|---|---|---|
| Original | ORIGINAL FOR CONSIGNEE | Travels with goods to the receiver |
| Duplicate | DUPLICATE FOR TRANSPORTER | Driver/transporter |
| Triplicate | TRIPLICATE FOR CONSIGNER | Stays with you |
Many businesses print three copies for every challan, supply or not, so warehouse staff follow one routine.
Do you need an e-way bill with a delivery challan?
Rule 55(3) says goods moving on a delivery challan in lieu of an invoice "shall be declared as specified in rule 138", which is the e-way bill rule. In practice:
- Generate the e-way bill using the delivery challan as the document type and its number and date.
- Choose the right sub-type, for example job work, exhibition, or "for own use".
- Job work movements have special treatment in the e-way bill rules, including situations where an e-way bill is needed even below the usual value threshold for inter-state movement.
Thresholds, exemptions and validity are in e-way bill limit and rules. The key point here: a delivery challan does not replace the e-way bill; it is the document the e-way bill refers to.
Worked example 1: sending fabric for job work
A Tiruppur garment exporter (registered in Tamil Nadu) sends 2,000 metres of grey cotton fabric to a registered dyeing unit in Erode (same state) for dyeing.
- Fabric value: 2,000 m × ₹110/m = ₹2,20,000
- Purpose: job work, not a supply
Delivery challan DC/26-27/0215
- Consigner: exporter, with GSTIN
- Consignee: dyeing unit, with GSTIN
- HSN 5208, description "Grey cotton woven fabric, unbleached, for dyeing"
- Quantity: 2,000 MTR
- Taxable value: ₹2,20,000
- Tax: not charged (job work movement)
- Purpose: "Sent for job work – dyeing"
- Signature
An e-way bill is generated against the challan, since the consignment value exceeds the general threshold. When the dyed fabric returns, the job worker sends it back on its own challan, and bills its dyeing charges on a tax invoice. Job work also has time limits for bringing inputs back, which your tax adviser can confirm for your case.
Worked example 2: goods sent on approval
A Jaipur jeweller sends a set of silver articles worth ₹1,60,000 to a registered retailer in Udaipur (same state) on approval. The retailer has 10 days to decide.
- On dispatch: delivery challan with value ₹1,60,000, no tax, marked "On approval".
- Day 8: the retailer keeps articles worth ₹1,00,000 and returns the rest.
- Jeweller issues a tax invoice for ₹1,00,000. If the applicable rate is 3%: CGST 1.5% = ₹1,500; SGST 1.5% = ₹1,500; total ₹1,03,000.
- Returned articles worth ₹60,000 come back on the retailer's challan or are recorded against the original.
The tax invoice is what triggers tax; the challan only covered the movement. Check the rate for your goods with the GST calculator.
Worked example 3: machinery in lots
A Rajkot machine builder sells a large press to a buyer in Pune, shipped in three trucks because of its size.
- Before the first truck leaves, the builder issues the complete tax invoice for the whole press, say ₹18,00,000 + IGST 18% ₹3,24,000 = ₹21,24,000.
- Truck 1 carries a delivery challan referring to that invoice, plus a certified copy of the invoice.
- Truck 2 carries its own challan and a certified copy.
- Truck 3 carries its own challan and the original invoice.
That is the sequence Rule 55(5) prescribes for SKD/CKD goods and goods in batches or lots.
Worked example 4: liquid gas of unknown quantity
A Vadodara industrial gas supplier sends a tanker of liquid nitrogen to a registered pharmaceutical plant in Ankleshwar (same state). The exact quantity delivered will be known only after the tanker is weighed at the plant.
- At removal, the supplier issues delivery challan DC/26-27/0730 with a provisional quantity of 12,000 kg, an estimated taxable value of 12,000 × ₹14 = ₹1,68,000, and, because this movement is for supply, the expected tax: CGST 9% ₹15,120 and SGST 9% ₹15,120.
- At the plant, the weighbridge shows 11,640 kg actually delivered.
- After delivery, the supplier issues a tax invoice for the actual quantity: 11,640 × ₹14 = ₹1,62,960; CGST 9% = ₹14,666.40; SGST 9% = ₹14,666.40; total ₹1,92,292.80.
Rule 55(1)(a) and 55(1)(v) exist for exactly this case: the challan shows a provisional quantity, and the invoice settles the real figure. (The 18% rate here is for illustration; confirm the current rate for your gas and use the GST calculator for the split.)
How should you set up challans in your billing system?
A clean setup prevents most problems:
- Create a dedicated challan series per GSTIN, such as DC/26-27/0001, and never share it with invoices.
- Add a mandatory "purpose" field with fixed options: job work, exhibition, on approval, repair, own use, supply (invoice to follow), lots against invoice.
- Make the tax columns conditional so tax prints only when the purpose is "supply".
- Link challans to invoices for approval sales, lots and liquid gas, so you can see which challans are still open.
- Track job work challans until the goods return, with the date each one went out.
- Generate the e-way bill from the challan so the document number and value match.
- Review open challans monthly. An old, unconverted "on approval" challan is often an unbilled sale.
These open-challan reviews also feed the documents-issued table of your GSTR-1, where delivery challans are counted by type.
Delivery challan vs tax invoice vs e-way bill
| Point | Delivery challan | Tax invoice | E-way bill |
|---|---|---|---|
| Purpose | Moves goods without a supply invoice | Records a taxable supply | Declares movement on the portal |
| Legal basis | Rule 55 | Section 31, Rule 46 | Section 68, Rule 138 |
| Shows tax? | Only if movement is for supply | Yes | Shows values from the underlying document |
| Reported in GSTR-1? | Counted in documents issued | Yes, in detail | No |
| Needed with the other? | Often needs an e-way bill | Often needs an e-way bill | Always refers to an invoice, bill or challan |
How do you close a challan once the goods come back or are sold?
A challan is only half of the story. Every challan you raise should end in one of three outcomes, and your records should show which one.
- Converted to a tax invoice. For goods sent on approval or where the quantity was unknown at removal, Rule 55(4) says the supplier issues the tax invoice after delivery. Quote the challan number on the invoice so the two documents can be traced together.
- Goods returned. For job work or approval goods that come back, record the return against the original challan number and quantity, so your stock register balances.
- Partly sold, partly returned. Invoice only the accepted quantity and record the rest as returned. Do not leave the challan open with a balance nobody tracks.
A simple monthly review helps: list every challan older than 30 days that is still open, and ask the person who dispatched it what happened. Open challans with no explanation are the first thing an officer will question during an audit, because they look like goods that left without an invoice.
Common mistakes
- Using a challan for routine sales and invoicing weeks later.
- Charging tax on a job work challan.
- No e-way bill because "it is only a challan".
- Missing HSN or value, which leaves the vehicle exposed at an inspection.
- Skipping the purpose line, so an officer cannot tell why goods are moving.
- Not sending a certified invoice copy with each lot in a multi-truck shipment.
- Sharing the tax invoice series with challans.
Key takeaways
- Rule 55 allows a delivery challan for job work, liquid gas, non-supply movements and notified cases.
- Nine particulars are required; tax is shown only when the movement is for supply.
- Prepare it in triplicate: consignee, transporter, consigner.
- A challan does not replace the e-way bill; it is the document the e-way bill uses.
- For goods in lots, the full invoice goes first, then a challan per consignment.
Billing Software by Betterwork issues delivery challans from their own series, converts approved challans into tax invoices, and generates e-way bills from either document.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.