Invoices & documents Delivery challans

When is a delivery challan required?

Use a delivery challan when goods leave your premises but no sale is being made at that moment, or the invoice cannot be finalised at removal. If the movement is a sale, you need a tax invoice instead.

Updated 2026-11-053 min read

Who this is for

Manufacturers using job workers
Jewellers sending goods on approval
Traders with several godowns
Dispatch and godown staff
Businesses at exhibitions

On this page 11

The rule in one line

Rule 55 of the CGST Rules allows goods to be moved on a delivery challan in place of a tax invoice for: supply of liquid gas where the quantity is not known at removal, transport of goods for job work, transport of goods for reasons other than supply, and other supplies the government notifies. Everything in this guide follows from those four buckets.

This is general information, not tax advice. The exact list can be expanded by notification, so confirm on cbic-gst.gov.in.

Situations that use a challan

Situation	Challan or invoice?	Why
Raw material sent to a job worker	Challan	Job work is specifically covered
Goods sent on approval or sale-or-return	Challan, invoice when accepted	Supply happens only on acceptance
Stock moved to your own godown in the same state, same GSTIN	Challan	Not a supply
Stock moved to your branch in another state (different GSTIN)	Tax invoice	Transfer between distinct persons is a supply
Customer's machine taken back for repair	Challan	Movement not for supply
Goods sent to an exhibition or trade fair	Challan	No sale yet
LPG or liquid gas with unknown quantity	Challan	Quantity fixed later
Normal sale to a customer	Tax invoice	It is a supply

Inter-state branch transfers are covered in GST on stock transfer between branches.

Goods on approval: a worked example

A Jaipur jeweller sends 12 pieces worth ₹4,80,000 to a Delhi retailer on approval on 1 December. The goods move on a delivery challan, with an e-way bill as needed.

On 15 December the retailer keeps 5 pieces worth ₹2,10,000 and returns 7.
The jeweller issues a tax invoice for ₹2,10,000 plus GST, dated when the retailer accepts.
The 7 returned pieces come back against the same challan reference.

The law sets an outer limit: for goods sent on approval, the invoice is due at acceptance or six months from removal, whichever is earlier. If the retailer neither accepts nor returns the goods within six months, treat them as supplied and invoice them.

Job work: the most common case

A manufacturer sends inputs or semi-finished goods to a job worker for processing, such as plating, cutting, stitching or printing. The goods go on a challan; the job worker's charges come on their own tax invoice. There are time limits for getting the goods back (one year for inputs and three years for capital goods at the time of writing; moulds, dies and tools are treated differently). Goods not returned in time are treated as supplied by the principal from the day they were sent. See GST on job work.

Keep a simple register: challan number, date sent, item, quantity, returned quantity, balance with the job worker. Reconcile it every quarter.

When a challan is not enough

A sale disguised as a transfer. If the customer is buying, issue a tax invoice. Moving goods on a challan to delay the invoice is a compliance risk.
Inter-state branch with separate GSTIN. Needs a tax invoice and tax.
Large movements needing an e-way bill. The challan is the document declared in the e-way bill, not a replacement for it. Read e-way bill basics.

Quick decision checklist

Is ownership passing to the receiver now? If yes, tax invoice.
Is the receiver a separate GSTIN of your own business? If yes, tax invoice.
Is it job work, approval, repair, exhibition or own godown in the same registration? If yes, challan.
Will the goods come back or be billed later? Note the expected date on the challan.
Does the value or distance need an e-way bill? Generate it with the challan as the document.

Doing this with Tally and Cashflow OS

With Cashflow OS you can prepare a delivery challan on the phone from your Tally items and parties, with your letterhead and signature, and send the PDF to the receiver on WhatsApp before the vehicle reaches. Where stock movement is tracked in Tally, a delivery note or stock journal can be posted through the connector. E-way bills can be generated from Cashflow OS for synced Tally vouchers on plans that include them; otherwise use the portal.

Avoid these

Common mistakes

MistakeMoving a sale on a challan to delay the invoice
Do this instead
If the customer is buying, issue a tax invoice at or before removal.
MistakeBranch transfer to another GSTIN on a challan
Do this instead
Transfers between distinct GSTINs are a supply; issue a tax invoice with tax.
MistakeApproval goods never invoiced or returned
Do this instead
Track approval goods; invoice on acceptance or when the time limit in the law runs out, whichever is earlier.
MistakeNo register of goods lying with job workers
Do this instead
Keep challan, date, item, quantity sent and returned, and reconcile the balance every quarter.

Keep handy

Checklist

When is a delivery challan required — 7 checks. Tick them as you go.

Ownership not passing to the receiver now
Receiver is not a separate GSTIN of your business
Reason noted: job work, approval, repair, exhibition or own godown
Expected return or billing date written on the challan
E-way bill generated where value or distance needs it
Job work register reconciled every quarter
Challans kept for the retention period under GST law

In Cashflow OS

How Cashflow OS helps

Cashflow OS puts your TallyPrime books on every phone in the team. Where it fits this topic:

Challans made on the phone

Prepare a delivery challan from your Tally items and parties with your letterhead and signature, and send the PDF on WhatsApp before the vehicle reaches.

See Delivery challans

Stock movement into Tally

Where Tally tracks the movement, a delivery note or stock journal can be posted through the connector once writing is switched on.

See Create Tally vouchers from your phone

Questions people ask

Do I need a challan to send samples to a customer?

If the samples are free and no sale is happening, they move on a challan. Whether GST applies to free samples depends on the case; see our guide on GST on free samples and gifts.

Is a challan needed for goods sent to my own shop across the road?

If both places are under the same GSTIN, it is a movement for reasons other than supply, so a challan is the right document.

Can goods returned by a customer move on a challan?

A registered customer returning goods often issues their own document. Many businesses use a challan or the buyer's debit note with reference to the original invoice. The credit note follows from the supplier.

How long should challans be kept?

Like other GST records, for the retention period under GST law, which runs for 72 months from the due date of the annual return for that year.

Does a challan replace an e-way bill?

No. Where an e-way bill is needed, the challan is the document declared in it. Check e-way bill rules on the portal.

What happens if job work goods are not returned in time?

They are treated as supplied by the principal from the day they were sent. Check the current time limits on cbic-gst.gov.in.

Can a challan be converted into an invoice later?

For approval goods, yes: invoice the accepted part when the buyer accepts. Reference the challan on the invoice.

Which rule covers delivery challans?

Rule 55 of the CGST Rules. The list of cases can be expanded by notification. This is general information, not tax advice.

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.