Delivery Challan Under GST: Meaning, Rules & Format

A delivery challan is the document that moves goods out of your warehouse without a sale. Use it for job work, branch transfers, or dispatch where quantity isn’t finalized. For a manufacturer, it’s a stock-movement record before it’s a GST document.

When You Actually Need One

A delivery challan applies whenever goods physically move but a sale hasn’t happened (yet, or ever):

• Job work. Sending raw material or semi-finished goods to a subcontractor for processing.

• Branch or warehouse transfers. Moving stock between your own locations under the same GSTIN.

• Goods on approval or sale-or-return. Sent to a customer to evaluate, with an option to return unsold.

• Quantity not finalized at dispatch. e.g. bulk or liquid goods measured on delivery.

GST Rules and Required Fields

Under Rule 55(2) of the CGST Rules, a delivery challan must be issued in three copies. The original goes to the consignee, the duplicate to the transporter and the triplicate to the consigner. Each challan must be serially numbered (not exceeding sixteen characters) and must include:

• Date and challan number.

• Consigner and consignee details, including GSTIN if registered.

• HSN code and description of the goods.

• Quantity, and taxable value where applicable.

• Tax rate and CGST/SGST/IGST/Cess if the movement attracts tax, plus signature.

Delivery Challan Format: A Sample Layout

Rule 55 lists what a challan must carry, not how it must look. Most manufacturers use a simple one-page layout like this.

Mark each copy clearly: “Original for consignee”, “Duplicate for transporter” and “Triplicate for consigner”. If the exact quantity isn’t known at dispatch, write a provisional quantity. The tax invoice then follows after delivery.

Job-Work Challans: The Return Deadline

Goods sent to a job worker on a challan have a clock running. Under Section 143 of the CGST Act, inputs must come back within one year. Capital goods get three years.

Moulds, dies, jigs, fixtures and tools are outside this time limit. Everything else needs watching, challan by challan.

If the deadline passes, the law treats the goods as supplied by you on the day they left. You then pay GST on them, with interest. A paper register won’t warn you when a challan is close to its limit.

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Where This Breaks Down on Excel or Paper

• Challan numbers get duplicated when different team members issue them and no single system tracks them.

• Stock isn’t actually deducted until someone manually updates a separate inventory sheet, if they remember to.

• A branch-to-branch transfer means the receiving warehouse works off stale numbers until that update happens.

• There’s no link back to the eventual invoice when a job-work or approval-basis dispatch turns into a real sale.

• Finance and the shop floor end up reconciling two disconnected records instead of one.

A job-work challan, start to finish

1. Issue the challan in three copies

2. Generate e-way bill (always if inter-state)

3. Job worker processes the material

4. Receive goods back against the challan

5. Raise a tax invoice when sold

How TranZact Handles This

TranZact connects every movement that affects stock on one system, across multiple stores.

For job work, sub-contracting is part of production management on the Grow, Scale+ and Dominate plans. You know how much stock is out on job-work.

When a movement becomes a sale, it runs through the same sales flow as any other order: dispatch, e-invoicing and payment. TranZact generates the e-way bill from the GST invoice, with the e-invoice (IRN) in the same flow.

If you run accounts in Tally or Zoho Books, that stays exactly where it is. TranZact syncs one-way, so operations data isn’t re-entered on the accounting side.

Want to see job-work stock, transfers and invoices on one system? Book a demo and we’ll walk you through it.

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