There are many instances during an exchange of goods or services when the sale doesn’t take place immediately or the payment is not delivered at the right time, a delivery challan is issued by the seller. In this article, you will learn about the key components of a delivery challan along with all the other necessary information about it including the delivery challan format, its uses and benefits in detail.
What is a Delivery Challan?
A delivery challan or a dispatch challan or a dispatch slip is a document that holds the necessary details about the goods that are being delivered such as the quantity, quality, price, buyer/seller details, etc. Not only that, but this document also includes the delivery time and location as well.
According to Section 31, CGST Act passed in 2017, a registered supplier of taxable goods must issue a tax invoice containing the price, quantity, description and the tax levied on the total items. However, there can be some cases, where suppliers are required to send a delivery challan instead of a tax invoice at the time of transporting the goods.
When Should You Issue A Delivery Challan?
1. Conditions Where Delivery Challan Under GST Can Be Issued Without an Invoice
According to Section 55 of CGST Rules, the following are the situations when a delivery challan can be sent at the time of transporting goods from one place to another in absence of an invoice :
- During the supply of liquid gas where the total quantity at the time of dispatching the shipment from the business place is not known to the supplier.
- Delivery Challan is required for transporting goods from one job worker to another or from principal to job worker or the return of goods from job work to Principal.
2. Conditions When A Delivery Challan Should Be Issued Before The Supply Takes Place
There can be instances when the transportation of items is required even before the actual sale takes place. Some of these instances are as follows :
- Goods That Are Sent on Approval Basis
When the goods are being transported or received within or outside the state of approval for sale or return purpose and are dispatched before the actual supply takes place, then a delivery challan must be issued at the time of dispatching.
- Sending Artwork To Various Art Galleries
Artists who carry their artworks to different galleries to find their buyers in the exhibitions and sell if their work is selected by the buyer. In such a scenario, the artwork from one gallery to another within or outside the state needs to be transported along with a challan.
3. Transporting Goods Outside The Country For Export Promotion or Exhibition
As per circular number 108 /27/2019-GST, it has been made clear that the dispatch of goods out of the country on a consignment basis or for exhibition or export promotion, then a delivery challan is required. The reason is, this type of exchange can neither be termed as a “supply” nor an “export”, hence no bond or LUT is needed. Instead, a delivery challan is issued along with them.
4. Sending Goods in Multiple Shipments
In a scenario where the transfer of goods takes place in the form of multiple shipments that are transported under a completely or semi-knocked down condition, then the seller must issue a standard invoice with the first shipment and then send a delivery challan with each of the other shipments, with a reference to the original invoice.
5. When Standard Tax Invoice Can Not Be Issued At The Time of Dispatch
When the goods are transported to the recipient for supply purposes, but the tax invoice can’t be issued for some reason, at the time of removal, then the supplier should issue an invoice after delivery takes place.
6. When E-way Bill Is Not Possible
When a bill of supply or tax invoice is not required and the person doesn’t need to carry an e-way will, then a delivery challan can be sent as an alternative.
7 Key Components of A Delivery Challan
A delivery challan is made with 7 important components.
To learn about the main components of a delivery challan, you need to fully understand the delivery challan format. Here is what a delivery challan format comprise of:
A delivery challan must have a unique serial number that shouldn’t exceed more than 16 characters. This serial number can be a combination of characters, digits and letters in one or more than one series. Besides, the following are the key components of a delivery challan format :
1. Date and Serial Number
The date on which the delivery challan is issued and the 16 digit serial number makes the first and the most important component of a delivery challan format. Both of these components help in referencing the document to the tax invoice
2. Name, Contact Number, Address and GSTIN Number of The Buyer
The next part of the delivery challan format consists of the name, complete address, contact number and a unique GSTIN number of the buyer. Moreover, if the buyer is not registered, then the name, number, address, delivery location and HEN code of products must be mentioned.
3. Description of Goods
As per the right delivery challan format, the description of goods should contain the quality, quantity, material and specifications.
4. Taxable Amount of Supply
The total taxable amount of the goods should be mentioned towards the end of the document. The price should be nicely broken down.
5. GST Tax Rate
Next, the Goods and Service Tax Rate and the tax value should be categorized as CGST, IGST, SGST and GST Cess.
6. Delivery Location in Case of Interstate Transportation
In the case of interstate transportation, the complete delivery address of the supply should be mentioned.
7. Signature of Supplier
The last part of the delivery challan format includes the digital signature of the supplier, which should be mentioned at the end of the document.
Rules for Issuing A Delivery Challan Under GST
According to GST Rule 55 (2), a delivery challan should be generated in three copies for the following reasons :
- The original copy should be sent to the buyer
- The duplicate copy should be given to the transporter
- The triplicate copy should remain with the supplier for accounting purposes.
So, this was all about delivery challan. You’ve learned about the significance, use and key components of a delivery challan. It is a document that is issued by a seller to a buyer under the circumstances mentioned above. There are many software like MybillBook that can help you generate delivery challans in the right format and in the easiest way. Make sure to check such software out!