A delivery challan is the document that travels with goods when they move but no sale has yet taken place, or when the sale cannot be invoiced at the time of dispatch. Rule 55 of the CGST Rules says when it can be used and what it must contain. For a manufacturer that sends work out, or a trader who sends goods on approval, it is a daily document.
01When a delivery challan is used
Rule 55 allows a delivery challan, in place of a tax invoice, in these cases:
| Case | Example |
|---|---|
| Liquid gas where the quantity is not known at removal | An industrial gas supplier filling a customer's tank from a tanker |
| Goods sent for job work | A Rajkot pump maker sending castings to a machining unit |
| Goods moved for reasons other than a supply | Stock moved from a factory to a godown under the same GSTIN, goods sent for repair, exhibition stock |
| Goods sent on approval or sale-or-return | A Jaipur jeweller sending pieces to a retailer for selection |
| Other notified cases | Such as goods moved in parts, where the full supply is invoiced once |
Where a tax invoice could not be issued when goods left, because the supply is not yet complete, the invoice is issued after delivery.
02What a delivery challan must show
- Date and number, up to 16 characters, in a consecutive series.
- Name, address and GSTIN of the consignor.
- Name, address and GSTIN of the consignee, if registered.
- HSN code and description of the goods.
- Quantity, including provisional quantity where it is not known.
- Taxable value.
- Tax rate and amount, where the movement is a supply to the consignee.
- Place of supply, for inter-state movement.
- Signature.
It is prepared in triplicate: the original for the consignee, the duplicate for the transporter and the triplicate for the consignor.
03Job work
Job work is the most common use. A principal sends inputs or semi-finished goods to a job worker, who processes them and sends them back.
How it works
- Send on a challan. The principal sends goods on a delivery challan, with no GST, because no sale has happened.
- Generate an e-way bill if the value is above the limit, or whatever the value if the movement is inter-state.
- Job worker processes the goods and charges GST on the job work charge, by tax invoice.
- Goods come back to the principal, on the job worker's challan, or go straight to the principal's buyer if the principal has declared that place.
Time limits
Under section 143 of the CGST Act, inputs must come back within one year and capital goods within three years of being sent. If they do not, the dispatch is treated as a supply on the day it was sent, and the principal pays GST with interest. Moulds, dies, jigs, fixtures and tools are outside this limit.
Example
A Rajkot pump maker sends 500 pump body castings worth ₹4,50,000 to a machining unit in Shapar, 15 km away. The castings move on a delivery challan, with an e-way bill because the value is above ₹50,000. Two weeks later the machined castings come back, with the job worker's tax invoice for machining at ₹80 a piece: ₹40,000 plus GST. The pump maker claims that GST as input tax credit.
ITC-04
Principals report goods sent to and received from job workers in Form ITC-04. As of October 2026, those with aggregate turnover above ₹5 crore file it every half-year, by 25 October and 25 April. Others file once a year, by 25 April.
04Goods on approval
When goods go on approval, sale-or-return or a similar basis, they move on a delivery challan. The tax invoice is issued when the buyer accepts the goods, or six months after removal, whichever is earlier.
A Jaipur jeweller sending 40 pieces to a Bengaluru retailer for selection uses a challan. When the retailer keeps 15 pieces and returns 25, the jeweller invoices the 15.
05Moving stock between your own places
Stock moved between two places under the same GSTIN is not a supply, and moves on a delivery challan. A Surat textile trader moving cloth from its Ring Road shop to its godown in Sachin uses one.
Stock moved to a branch in another state, with its own GSTIN, is a supply between distinct persons. It needs a tax invoice with IGST.
06Delivery challans and e-way bills
The e-way bill is generated against the delivery challan, with the reason for movement shown as job work, supply on approval, own use or exhibition. The rules on value limits and validity are the same as for invoices. See the e-way bill guide.
07Common mistakes
- Using a challan for a completed sale to delay the invoice. The tax is still due at the time of supply, with interest if paid late.
- Losing track of job work goods. After one year, inputs not returned are treated as supplied.
- No series for challans, so numbers repeat across branches.
- Missing value on the challan. A taxable value is needed even when no tax is charged.
08Keeping challans under control
Number challans in their own series and keep a register of open challans: goods sent, goods returned and the balance with each job worker or customer. Review it monthly. Job work goods close to the one-year mark, and approval goods close to six months, need either a return or an invoice before the date passes.
This guide is general information as of October 2026 and does not amount to tax advice.