Businesses today are geographically diversified and transportation of goods has become inevitable, even for reasons other than supply. Thus while transporting goods from one place to another, a document called “Delivery challan” is issued to keep track of the goods. In this article, let’s understand the basics of the Delivery challan, the rules governing it and how to prepare a proper format for Job work in Excel and Word.
Did you know? The word “Challan” is a Hindi word that has become an Indian English technical word that is now officially used in financial transactions.
What is a Delivery Challan?
As per GST Law, a “Tax Invoice” is issued for the ‘supply’ of goods and services. However, in certain circumstances, goods need to be transported for reasons other than supply, such as stock transfer between branches, job work, transfer to a warehouse, etc. In such cases, instead of a tax invoice, Delivery Challan is issued by the supplier. It is also known as a “Dispatch slip” or “Delivery slip”.
Manufacturing or Trading Elements
Businesses that are involved in manufacturing or trading use delivery challans.
The following are the key particulars of a delivery challan:
- Serial number (not exceeding 16 characters)
- Date of dispatch
- Name and address of the Supplier
- Name and address of the Recipient
- Place of Delivery
- GSTIN of Supplier
- GSTIN of Recipient
- Quantity and Description of the goods
- HSN code of goods
- Taxable value
Types of copies of Delivery Challan
- Original Copy - for the consignee
- Duplicate Copy - for the transporter
- Triplicate Copy - for the consignor
Period of retention of Delivery Challan
According to section 36 of CGST Act, every registered person is required to keep and maintain books of account including delivery challan for a period of 72 months from the due date of furnishing of annual return for the relevant year.
Also Read: Types of GST Returns: Forms, Due Dates & Penalties
Delivery challan vs. Tax invoice
Tax Invoice is issued for the “supply” of goods
It is issued when goods are transported for reasons other than supply
It is issued for both goods and services
Delivery challan applicable only in case of goods
Tax invoice is a bill that reflects a Sale transaction
The process can be considered as an acknowledgment about the goods sent
Tax amount is shown in the Invoice
In Delivery Challan only Taxable value is shown
Receiver can avail Input tax credit based on Tax Invoice
Input tax credit cannot be claimed based on Delivery challan
Ownership of the goods is transferred
Ownership of goods still remain with Principal
When Do We Issue Delivery Challan?
Rule 55 of the Central Goods and Services Tax Rules, 2017 lays down the circumstances in which delivery challan can be issued.
Supply Of Liquid Gas
At the time of removal of goods, if quantity is not known, suppliers can issue a delivery challan instead of a tax invoice.
Goods Sent for Job Work
In job work, delivery challan is issued in the following cases:
- Goods sent by the Principal to Job worker
- Goods sent by one job worker to another
- Goods returned by the job worker to the Principal
Goods are sent on an approval basis
When goods are sent on sale on an approval basis, the sale is confirmed only when the client accepts the goods. Since the goods are removed before supply, a delivery challan is issued.
- Transportation of works of art to galleries
When artists send their works of art to be displayed at a gallery, it does not amount to a sale unless someone buys them in the exhibition. In such cases, goods are removed by issuing a delivery challan.
- Sending goods outside India for exhibition
The CBIC Circular clarifies that sending goods out of India to be displayed at an exhibition is neither “Supply” nor “Export”. Thus such goods are sent based on the delivery challan.
- Transfer of goods in multiple shipments
When goods are transported in multiple shipments, the supplier must issue a tax invoice before the dispatch of the first shipment. After that, every shipment must be accompanied by a delivery challan concerning the tax invoice.
- Transfer of goods to the warehouse
A delivery challan is issued when goods are transported from factory to warehouse or from one warehouse to another.
Also Read: Important Benefits of Registering for Composition Scheme under GST
Delivery Challan For Job Work
As per Sec 2(68) of the CGST Act 2017, Job work refers to “any process or treatment undertaken by a person on goods belonging to another person”. The ownership of the goods does not transfer to the Job worker but it rests with the Principal.
A Registered person (Principal) can send inputs/capital goods for job work without payment of tax. Similarly, it can be sent from one job worker to another job worker or returned to the Principal on completion of job work without payment of tax. All such movement of goods must be accompanied by a Delivery Challan as per Rule 55.
Delivery Challan Format for Job Work
There is no specific format for a Delivery Challan under the GST Law. However, CGST Rules prescribe the specific particulars it must contain, such as date, supplier and job worker details, their GSTIN, description of goods, etc based on those requirements, let’s understand how to create a Delivery challan template.
We can create a Delivery challan template in varIous ways, as follows:
- Delivery Challan Format in Excel
- Delivery Challan Format in Word
The steps and format are the same in both. Following is an outline of a Delivery Challan format.
- Company logo
- Name and address of the Principal
- GSTIN of the Principal
- Delivery Challan number (serially numbered, not exceeding 16 characters)
- Type of Delivery Challan (Original/Duplicate/Triplicate)
Details of Job Worker
- Name and address of the Job worker
- GSTIN of the Job worker
- Contact details
- Description of Job work to be done
- Name and address of the Transporter
- GSTIN of the Transporter
- Mode of Transport
- Vehicle Number
- Date of dispatch
Description of goods
- Serial number
- Description of goods
- HSN code
- Quantity of goods
- Unit of measurement
- Taxable value
- GST Rate
Terms and conditions
This section contains the terms and conditions on which the goods are sent.
Also Read: GSTR-1 – Return Filing, Format, Eligibility & Rules
Record keeping is one of the essential functions of an organization. An entity maintains various documents, one of which is the delivery challan. To make a challan efficiently, one must seize the unique details of the goods, such as the HSN codes, the taxable amount, and the description.
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