Many Indian SMEs often confuse delivery challans and invoices — but under GST, they serve very different purposes.
Mixing them up could lead to compliance issues, delayed payments, or unhappy customers.
Let’s break down the differences in plain language.
What is a Delivery Challan?
A delivery challan is a document that accompanies goods being transported without an actual sale taking place.
It works as proof of delivery, not proof of payment.
Common uses:
- Sending goods for job work or processing.
- Moving goods between branches.
- Delivering goods for approval before final sale.
Key details included:
- Date and challan number.
- Name, address, and GSTIN of supplier and recipient.
- Description and quantity of goods.
- Reason for transportation.
- Signatures.
What is an Invoice?
An invoice is a legal document requesting payment for goods or services.
It confirms that a sale has happened and includes all the details required for GST compliance.
Key details included:
- Invoice number and date.
- Supplier and recipient details (with GSTIN).
- HSN/SAC codes.
- Quantity, rate, taxable value.
- GST rates and amounts.
- Total payable amount.
Key Differences: Delivery Challan vs Invoice
Feature | Delivery Challan | Invoice |
---|---|---|
Purpose | Record movement of goods (no sale yet) | Record a sale and request payment |
GST Impact | No GST charged | GST applied as per HSN/SAC |
Payment Request | No | Yes |
Legal Requirement | GST Rules — Rule 55 | GST Rules — Section 31 |
Common Usage | Job work, stock transfer, approval shipments | All taxable sales of goods/services |
When to Use Which
- Delivery Challan: Use when goods are moving without sale or before final invoicing.
- Invoice: Use when sale is confirmed, and you’re requesting payment.
Why It Matters for SMEs
Using the wrong document can:
- Lead to GST compliance issues.
- Cause problems in GST returns.
- Delay customer payments.
The good news? Modern billing software → automates this — ensuring you issue the correct document every time.
External Resources
FAQ — Delivery Challan vs Invoice
1. Can I issue a delivery challan instead of an invoice?
Only if no sale has taken place yet. If payment is due, you must issue an invoice.
2. Is GST applicable on delivery challans?
No, GST is not charged on delivery challans because there is no sale.
3. Can I convert a delivery challan into an invoice later?
Yes, once the sale happens, you can issue an invoice referencing the delivery challan.
4. Do both documents need to be reported in GST returns?
Invoices are reported; delivery challans are generally not unless specified for particular cases.