What Are Delivery Challans?
As a businessperson, is this question placing you in a dilemma? Well, this article contains all information about Delivery Challans!
Also referred to as a dispatch challan or a delivery slip, a Delivery challan may be a document that contains the outline, condition, and quantity of products delivered.
The paper outlines the recipient of the products, their locations and the date of delivery. The main purpose of this challan is the indication of goods delivery and the customer acknowledgement receipt.
Doesn’t sound so complicated, does it? I hope not!
A minimum of 4 copies of the challan must be available for transaction purposes. The four copies serve the following four functions:
- The first copy is sent to the accounts department.
- Then the second goes to the sales department.
- Further,the copy is issued to the customer.
- The store department must retain the last copy for the aim of record keeping.
It is imperative to note that a challan is sent along with the shipped goods and it might, in some cases, not result in sales.
However, it is prepared with the hope that purchases will be made. A Delivery challan may be a central piece that’s employed by almost every organization in everyday transactions.
Difference Between an Invoice and A Delivery Challan
As a seasoned person in business, you could be wondering what difference exists between an invoice and a delivery challan since their functions look alike!
Well, here is the difference!
An invoice is a document which the customers use to show legal proof of ownership of the goods. With an invoice, the customer has accepted the full ownership of goods, with all the rights, risks and liabilities that they carry along. In case of transfer of goods in multiple shipments, where they transport goods in a semi knocked down or completely knocked down condition, the supplier shall issue the complete invoice before dispatch of the primary consignment and shall issue a delivery challan for every of the next consignments, giving reference of the invoice.
This is not the case with a mere delivery challan.
As highlighted above, a challan serves the sole purpose of showing that the customer has acknowledged the receipt of goods, but not their legal ownership or responsibilities.
Another slight difference between these two documents is that an invoice indicates the particular value of products delivered while the challan doesn’t. However, in some cases, challan may include the worth of products, but it never shows the tax charged to a customer.
Also, it is worth noting that an invoice and a challan can merge to result in something known as a Tax invoice cum delivery challan.
The Format of a Delivery Challan
Transportation of goods require issuing of Delivery Challan; Goods sent on approval basis ,where the goods being sent or taken within the State or outside the State on approval for sale or return basis and are removed before the supply takes place, Challan should be issued at the time of removal of goods.
Delivery Challan Format under GST- Challans must be in serial numbers not exceeding sixteen characters, in one or multiple series.
You must ship the challan under GST alongside the products as it contains important details of the goods in transport i.e. the quantity, buyer, and delivery address. It contains the small print of the things shipped, quantity of these goods, buyer and delivery address. The supplier may provide a payment method to the customer such as bank transfer, cash or cheque.
With this kind of information on your fingertips, you must be eager to learn about the formatting of a delivery challan. That’s what a shrewd businessman does, isn’t it? Well, here is what goes into creating it.
- Date and the number of the challan
- Serial number of the challan
- Name and the address of a registered supplier
- Name and the specific identity of the buyer
- Quantity and the description of the goods, including their HSN code
- Name and address of the transporter, otherwise known as the consigner
- Place of delivery of goods
The delivery challan must include these critical aspects.
How to ensure efficient Challan?
To make a challan more efficient, be keen on capturing the fine details of the goods such as the HSN code, their taxable value, and their description.
It is also important to note that the inclusion of a serial number in a delivery challan is compulsory. This is because a serial number identifies a challan and makes it easy to refer to a particular challan. Moreover, in cases of non registered recipient of goods , the delivery challan should mention the location of the business.
When to issue a Delivery Challan?
You are probably struggling over finding an answer to this question. These are the circumstances that compel you to issue a challan:
- When you need to determine the number of goods at the time of dispatch
- In the case where the supplier’s business location is hidden to the recipient of goods
- When you are supplying goods upon approval
- When you are transporting goods for job work
- Under any of these circumstances, you can issue a delivery challan .
The Bottom Line
Record keeping is a vital culture worth of cultivation by any successful business organization. In record keeping, books of account and other relevant documents must be maintained. One such document is the delivery challan. Where they do not require a person to carry an e-way bill under CGST rules rule 55A of CGST Rules inserted w.e.f. 23-1-2018 and where there is no requirement of tax invoice or Bill of Supply , the Challan should accompany the goods.
Using an inventory management software like ProfitBooks can help you systematize this process. With ProfitBooks, you can record inventory purchases and sales very easily. Creating a sales order and delivery challan is a matter of few clicks.
If you deal with inventory in your business, you should try ProfitBooks.