Delivery Challan under GST
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What is Delivery Challan under GST?
Delivery Challan meaning: As an enterprise or logistics head, does the question on invoice cum delivery challan arises in your mind too? Then this article will provide all the answers to your question right from the beginning.
What is a Delivery Challan?
Delivery challan is an instrument that carries details about the delivered goods such as quantity, condition and description. This tax invoice cum challan also contains the recipient details, delivery location and time. The principal purpose of Eway Bill delivery challan for stock transfer under GST.
Normally, three copies of Delivery Challan are generated under Section 55 (2) of the CGST rules:
- First for the Buyer
- Second for the transporter
- Third for the Seller
It shall be noted that delivery challan is communicated with the transported goods. It is an important document that is used by nearly by every business for a day-to-day transaction.
Difference between Delivery Challan and Invoice
What is the difference between an invoice and a delivery challan? This is the most common question that pops-up in the mind, as their functionalities are pretty much same.
| Particulars | Delivery Challan | Invoices |
|---|---|---|
| Meaning | A delivery challan/slip or note helps to acknowledge that goods are received or accepted by the customer. It does not transfer any legal ownership or rights. | An invoice or bill is a document through which the customer accepts the full-ownership, along with risk, rights and liabilities of the goods. |
| Contents | Quantity, condition and description of goods | Quantity, description, GST rate, HSN code and amount payable |
| When to send? | When goods are dispatched | At the time of dispatching of goods |
| Accounting entries | Cannot be used for making entries in the books of account. | Provides a base for entries in the books of accounts. |
| Acknowledgement | It shall be acknowledged by the recipient or customer. | The customer or recipient need not to acknowledge. |
| Taxable value of goods | Taxable value of goods | An invoice contains the taxable value of goods. |
However, a delivery challan & tax invoice can be combined together to form "delivery challan cum tax invoice."
Delivery Challan Format under GST
After all this information about the delivery challan format under GST, you must be looking out the formatting or the contents of the delivery challan. Here are the most critical aspects that must be included in a format of delivery challan under GST.
- Delivery challan date
- Delivery challan's serial number
- Registered supplier's name
- Buyer's name and identity
- The quantity and the details of the goods, along with their HSN codes
- The name and address of the transporter or consignor
- Delivery Place
- Signature
To make an errorless delivery challan, capture the fine details of the goods such as their taxable value, description, HSN code.
It shall be noted that delivery challan serial number is mandatory as it helps in its identification and makes it easier for future references. Moreover, in a case, if the person who is receiving such goods is unregistered, the place of a business must be clearly specified in a delivery challan.
When to issue a Delivery Challan?
You must be probably striving for a resolution to this question. These are the situations that impel you to generate a delivery challan in GST:
- In a situation where the business place of a supplier is not disclosed to the person receiving such goods
- Supplying goods on approval basis
- To transport job work goods such as machinery, dices etc.
- The number of goods cannot be determined at the time of dispatch (e.g. Liquid gas)
- Transportation of semi-assembled goods or completely in parts
Under any of these scenarios, a delivery challan can be generated and issued.
Conclusion
Book or record-keeping is a vital culture among successful enterprises, as they maintain proper records of each and every important document. One such document is a delivery challan in GST that allows the transfer of goods from one place to another.
Further, you can create and generate an errorless delivery challan, invoices and sales or purchase order in a few clicks, using auTotax GST software. In addition to this, autoTax helps you to automate all your GST compliances as it can be integrated with all the leading ERPs easily.
Frequently Asked Questions
What is the difference between delivery challan and invoice?
See below the differences between the Delivery Challan and Invoice:
- Invoice is the legal evidance of the ownership of goods or service with all the risks, liabilities it carries along with it; it depicts the real value of the goods
- Delivery challan indiates that the customer has accepted the receipt of goods, but does not show their legitimate responsibilities or ownership.
- It is mostly used during the goods transportation from one place to another mentioning the description, condition and goods quantity, but it may not result in a sale;
- It will not display the real value of the goods; delivery challan can carry the value of the goods noticed on it, but will not add the tax charged to customers.
Sometimes delivery challan and invoice can be merged to show as “Tax invoice cum delivery challan”.
What is the difference between delivery challan and tax invoice?
See below the differences between the Delivery Challan and Tax Invoice:
- Tax Invoice contains ownership and legal responsibilities whereas Delivery Challan doens not contain proof of ownership or legal responsibilities.
- Tax Invoice shows the actual value of goods where Delivery Challan shows that the customer has acknowledged receipt of the goods.
- Tax Invoice is proof that a sale transaction has taken place where Delivery Challan may or may not result in a sale.
- Tax Invoice depicts the actual value of the goods, including the applicable taxes but Delivery Challan displays the rate of a particular product but not the full value of the sale.
Is delivery challan legal in India?
Yes, a delivery challan is a legal and formal document in India. It is used for accounting and business management purposes.
What is a delivery challan used for?
Delivery Challan is created when goods are being transported from one place to another which may or may not result in sales.
What should be written on delivery challan?
See below the delivery challan format:
- Name, address and GSTIN of the consignor
- Name, address and GSTIN of the consignee
- HSN code
- Description of the goods being delivered
- Quantity and rate of the goods along with the amount in figures and words
- Signature of the supplier/authorised person
- Date of the challan
- Serial number of the challan
- Place of supply
- Amount of tax, where it is applicable
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