Glossary Invoice
Delivery challan
Definition
A delivery challan is a document that goes with goods moved without a sale at that time, such as job work, approval sales or transfers within a state.
Example
A Surat textile unit sends 1,500 metres of grey fabric worth ₹2,25,000 to a dyer for job work. It issues a delivery challan, not an invoice, and because the value is above the e-way bill limit, an e-way bill quotes the challan. When the dyed fabric returns, the dyer bills only its job work charge.
Delivery challan in TallyPrime and in Cashflow OS
Where to find itIn TallyPrime
TallyPrime records outgoing goods on a Delivery Note voucher and incoming goods on a Receipt Note. Both move stock without posting a sale or purchase, and an invoice can later be linked to them.
On your phoneIn Cashflow OS
Cashflow OS makes branded delivery challans to share as PDF, and delivery notes can be created from the phone and posted to Tally through the connector.
See Delivery challans
Common misunderstandings
- Watch outUsing a challan for a completed sale. Once goods are sold, a tax invoice is needed.
- Watch outAssuming a challan removes the need for an e-way bill. Above the limit, both may be needed.
When a delivery challan is used
- Sending goods to a job worker for processing.
- Sending goods on approval or sale-or-return, where the sale happens only if the buyer keeps them.
- Moving stock between your own godowns in the same state.
- Supplying liquid gas or similar goods where the quantity is known only at delivery.
- Sending goods in lots, when the full invoice was raised before the first lot.
Under GST, a delivery challan must carry a serial number, date, names, addresses and GSTINs, HSN, description, quantity, taxable value, tax rate and amount where it applies, place of supply and a signature. Our guide on when a delivery challan is required goes case by case.
Example
A garment unit sends 2,000 metres of fabric worth ₹3,20,000 to a job worker for stitching. No sale takes place, so it issues a delivery challan in three copies, quoting the value. The value is above ₹50,000, so an e-way bill is also generated with the challan as the document. When 1,900 shirts come back, the job worker issues its own invoice for the stitching charge, and the unit records the receipt of goods against the challan. Goods sent for job work generally need to come back within the time set in the law.
Delivery challan vs invoice
A challan records movement; an invoice records a sale. When goods sent on a challan are later sold, as with goods on approval, a tax invoice must be issued at that point. Many distributors also send a delivery note with goods even when an invoice exists, as proof of delivery signed by the customer. See delivery challan under GST.
Where it shows up in TallyPrime
TallyPrime records outgoing challans through the Delivery Note voucher, which moves stock out without posting a sale, and incoming ones through the Receipt Note. A sales invoice can later be made against the delivery note so quantities link up. With Cashflow OS, delivery notes can be created from the phone and posted to Tally, and the documents add-on prints branded delivery challans to share as PDF.
This is general information, not tax advice.
Related terms
Questions about Delivery challan
Is GST charged on a delivery challan?
How many copies of a delivery challan are needed?
Can a delivery challan replace an e-way bill?
Does a delivery challan need a serial number?
What is the difference between a delivery note and a delivery challan?
This page is general information for Indian businesses, not tax, legal or financial advice. Rules and rates change — check the official portals or your CA before acting.
