A quick guide to a delivery challan

Transportation of goods can sometimes be tricky. During transportation, it is highly likely that the goods may get misplaced, lost or even stolen. Though these times are rare and things have improved a lot in recent times, there are still instances where customers had to face problems due to transportation of goods. Delivery challans play a crucial role in tracking the shipment and in verifying its contents upon delivery.

What is a delivery challan?

A delivery challan is a document that details the particulars of products that is to be delivered by a shipment. This document helps in tracking stock and maintaining an accurate inventory.

When is a delivery challan issued?

When there is a sale, the delivery challan is typically issued at the time of delivery. However, if there is no sale, the delivery challan may be issued by the issuing bank based on the documentation provided to track shipping details and movements of goods.

Following are some of the cases in which a delivery challan could be issued:

  1. Whenever there is a transportation of goods on a return basis
  2. Whenever there is a transportation of goods for job work

Here are some industry based examples of when a delivery challan is issued:

For example, in case of movement of goods from one warehouse to another, delivery challan is issued when:

  1. The quantity of the goods is unknown
  2. The goods include artwork
  3. The goods need to be transferred abroad for various events such as export or promotional purposes. This cannot be called an export since the transfer is only short term and the product return once the event ends.
  4. Liquefied gas is being transported
  5. The seller is not able to issue a tax invoice

What are the different kinds of businesses that must use delivery challan?

Following are some of the businesses that almost always use delivery challans:

  1. Businesses from the trading and manufacturing industry. One prominent example of this is the businesses that deal with fast-moving consumer goods (FMCG)
  2. Businesses that wholesale their products like electrical goods/
  3. Businesses that own multiple warehouses and where transfer of goods between warehouses is mandatory. An example includes textile, apparel industry etc
  4. Businesses that supply products like furniture and home furnishing products.

How to write a delivery challan?

A delivery challan format should contain the following fields:

  1. Name of the consignor(the person sending the shipment) and the consignee(the person receiving the shipment)
  2. Address of the consignor and the consignee
  3. GSTIN of the consignor and the consignee
  4. 6 digit HSN code (Harmonised System of Nomenclature)
  5. List of goods that are being delivered and their respective description
  6. Quantity of the goods
  7. Rate (in figures and words)
  8. Supplier’s signature
  9. Data on which the challan is issued
  10. Unique serial number of the challan
  11. Place where the supply is to be made
  12. Tax amount

According to the CGST rule 55(2), three copies of delivery challans are to be issued:

  1. Original – for the buyer
  2. Duplicate – for the transporter
  3. Triplicate – for the seller

If you have completed your GST registration process and GST certificate download is complete, you are mandatorily required to follow these rules. There are some great step by step guides for the entire process on Khatabook.

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