7 Essential Components of a Delivery Challan

Many times during the exchange of products or services, if the transaction does not occur promptly or the payment is not delivered on time, the seller will issue a delivery challan. In this post, you will learn about the major components of a delivery challan, as well as all of the other information you need to know about it, such as the delivery challan format, its purposes, and its advantages. 

What exactly is a delivery challan? 

A delivery challan, also known as a dispatch challan or a dispatch slip, is a document that contains information on the products being delivered, such as amount, quality, price, buyer/seller data, and so on. Not only that, but the delivery time and place are also included in this paper.

A registered supplier of taxable products must submit a tax invoice specifying the price, quantity, description, and tax charged on the total items, according to Section 31 of the CGST Act established in 2017. However, in some situations, providers are required to send a delivery challan instead of a tax invoice when shipping products. 

When Should a Delivery Challan Be Issued? 

1. Conditions under which a delivery challan under GST can be issued in the absence of an invoice

Section 55 of the CGST Rules states that a delivery challan may be issued in the absence of an invoice when transferring goods from one location to another:

During the provision of liquid gas, the complete quantity is unknown to the supplier at the time of dispatching the package from the business location. 

A delivery challan is necessary when conveying products from one job worker to another, from the instructor to the job, or when returning items from the job to the instructor. 

2. Conditions Under Which A Delivery Challan Should Be Issued Prior To Supply 

There may be times when the transportation of things is necessary prior to the actual sale. The following are some examples:

• Goods Sent on an Approval Basis 

When products are transported or received inside or beyond the state of approval for the purpose of sale or return and are sent prior to the actual supply, a delivery challan must be given at the moment of dispatch. 

• Sending Artwork to Different Art Galleries 

Artists transport their paintings to several galleries in order to locate customers in exhibits and sell if their work is chosen by the buyer. In such a case, the artwork must be carried from one gallery to another inside or beyond the state, accompanied by a challan.

3. Transportation of goods outside the country for the purpose of export promotion or exhibition 

The shipping of products out of the nation on a consignment basis, or for display or export promotion, requires a delivery challan, according to circular number 108 /27/2019-GST. Because this form of deal cannot be classified as a "supply" or an "export," no bond or LUT is required. Instead, they are accompanied by a delivery challan book. 

4. Sending Multiple Deliveries of Goods 

When goods are transferred in the form of multiple shipments that are transported completely or partially separated, the seller must issue a standard invoice with the first shipment and then send a delivery challan with each of the subsequent shipments, referring to the original invoice.

5. When a standard tax invoice is unable to be issued at the time of dispatch

When products are conveyed to the receiver for supply purposes but the tax invoice cannot be produced at the time of delivery for whatever reason, the provider shall issue an invoice after delivery. 

6. When e-way billing is not a possibility 

A delivery challan can be issued as an alternative when a bill of supply or tax invoice is not necessary and the individual does not need to carry an e-way billing will. 

Businesses that use delivery challans

• Businesses engaged in trade and manufacturing (particularly the FMCG industry as a whole)

• Businesses with many warehouses where items are transported between warehouses on a regular basis (textile, garment, and apparel sectors)

• Suppliers of products (furniture/home furnishings businesses)

• Wholesale businesses (electronics and electrical items)

7 Important Elements of a Delivery Challan

A delivery challan is made up of seven essential components. 

You must first comprehend the delivery challan format in order to learn about the key components of a delivery challan. A delivery challan format looks like this:

A delivery challan must have a unique serial number that is no more than 16 characters long. This serial number can be a mix of characters, numbers, and letters from one or more series. Furthermore, the following are the essential components of a delivery challan format:

1. Serial Number and Date 

The initial and most important element of a delivery challan format is the date on which the challan is issued, followed by the 16-digit serial number. Both of these elements assist in the document's reference to the tax invoice. 

2. The buyer's name, contact information, address, and GSTIN number 

The following section of the delivery challan format includes the buyer's name, complete address, contact number, and unique GSTIN number. Furthermore, if the buyer is not registered, the product's name, number, address, delivery area, and HEN code must be included. 

3. Product Description

The description of items should include the quality, quantity, material, and specifications, according to the correct delivery challan format. 

4. Supply a taxable amount

The entire taxable value of the items should be stated at the conclusion of the paper. The cost should be clearly stated. 

5. The GST Tax Rate 

Following this, the Goods and Services Tax Rate and Tax Value should be classified as CGST, IGST, SGST, and GST Cess. 

6. Interstate Transportation Delivery Location 

In the case of an interstate shipment, the supply's entire delivery address should be specified. 

7. Supplier's Signature 

The last section of the delivery challan format comprises the supplier's digital signature, which should be noted at the conclusion of the document. 

GST Rules for Issuing Delivery Challans

A delivery challan must be prepared in three copies, according to GST Rule 55 (2), for the following reasons:

• The buyer should receive the original copy.

•  The transporter should be provided with a duplicate copy. 

• For accounting purposes, the duplicate copy should be retained by the provider.

Frequently Asked Questions about Delivery Challans

Who is in charge of creating the delivery certificate?

When delivering products, a vendor will normally provide a delivery certificate to the buyer. The things being delivered may or may not result in a sale.

What exactly is the distinction between a delivery note and a delivery challan?

A delivery note is simply paperwork that comes with a shipment of goods. Delivery challans, on the other hand, are given when products are delivered to the buyer and have an influence on inventory levels since they reduce inventory stock.

What exactly is a non-returnable delivery challans?

If a non-returnable gate pass is included with the delivery challan, it helps the authorities realize that the products have been delivered permanently and cannot be returned.

What is a returnable challan?

When goods are transferred out of the warehouse for a specific reason and must be returned soon, a returnable challan will be created.

Can we use a delivery challans to create an e-way bill?

Yes. Using the GST spot, any registered taxpayer or transporter can produce an e-way bill. Documents such as a tax invoice, bill of sale, delivery challans, and more can be submitted while establishing the e-way bill.

So it was all about the delivery challans. You now understand the meaning, usage, and major components of a delivery challans. It is a document supplied by a seller to a buyer under the aforementioned conditions. Many software programs, such as Munim, may assist you in creating delivery challans in the most efficient and accurate manner. Make sure to look at such software!