In manufacturing businesses, the transaction of goods and resources plays a big role. For effective sales, understanding the difference between delivery challan vs invoice is important for seamless inventory management. It helps the manufacturing business maintain accounts and avoid any mistakes in maintaining inventory stocks.
In this blog post, we will talk about what is a delivery challan, what an invoice is, and the differences between delivery challan and invoice. We will also go through their individual role and their legal implications in manufacturing businesses.
What Is A Delivery Challan?
A Deliver challan, also known as a dispatch challan or delivery slip, is a slip that contains information about the goods delivered to the retailer or customers. Manufacturing businesses often use it to track the inventory and delivery of items to customers.
This document comes under GST where a manufacturer needs to mention the amount of goods, state and description. The dispatch challan also contains some other information, such as recipient details, location, and delivery date. When creating the tax invoice, the company needs to follow the GST (Goods and Service Tax) rules to avoid the legal complications applied for goods and services.
Importance And Purpose Of Delivery Challan
Now, that you have understood the delivery challan meaning, let's go through its importance and purpose. Delivery challan under GST is generated in circumstances where no actual sales of goods or services occur. No sale means you do not have a GST invoice. So to move items between two places, a delivery challan is sent.
Manufacturing companies often issue delivery challan GST format slips in the following situations as per the GST law:
- When the quantity at the time of removal from the place of business is not known.
- When the goods are sent for job work.
- Where the goods are being sent on an approval basis. The supply of such goods is known only when the same are approved by the receiver.
- For transportation of goods like movement of goods to/ from warehouse, etc., which may not be a supply.
- Other scenarios include transportation for exhibitions or fairs, for quality testing, or for reconditioning.
Key Components Of Delivery Challan
The GST dispatch can be different from company to company. The components of delivery challan may also vary based on the specific needs of the manufacturing business or the regulatory requirements. But here is some basic information that you can find in the document.
- A unique pre-assigned serial number.
- The date the delivery challan is issued.
- Company’s logo, name, and address with Goods and Service Tax Identification Number (GSTIN).
- Detailed information about the product, including its quantity and Harmonized System of Nomenclature (HSN) code.
- Financial details like total taxable value, price per unit, overall amount, and discount are provided.
- Signature of the authorized person.
Delivery Challan Under GST
A delivery slip or delivery challan under GST is a document issued by an authorized person in the manufacturing business. A delivery slip is not required when a company moves its inventory within its organization. Instead, the manufacturing company needs to issue a returnable challan when goods are not sold but loaned, rented, or temporarily transferred.
It is the responsibility of a registry person or company to retain and maintain books of accounts for a period of 72 months. The company needs to provide the due date for submitting the dispatch challan and an annual return of the relevant year. All these processes and details are carried out under section 36 of the CGST Act.
What Is An Invoice?
An invoice is a formal document demanding payment, which is issued after the completion of sales of a product or goods. The invoice is the slip from the retailer's manufacturer. It includes detailed information on the commercial transaction, goods delivered or purchased by the customer, applicable taxes, and a breakdown of costs.
Importance And Purpose Of Invoice
The invoice is issued to clear all the dues of the recipients and also for accounting purposes. According to Section 31 of the CGST Act, it is important for manufacturing companies to provide tax invoices when goods are transported to the customers. The purpose of invoice or bill of supply is to reveal the information about the delivered items, quantity, rate of a unit, the overall amount, and the GST that is applied to them.
Key Components Of An Invoice
When comparing delivery challan vs invoice, a tax invoice is slightly different as it is a legal document that follows a GST law. It includes:
- The date of issuing on the sales slip.
- The supplier’s logo, name, company address, and GSTIN.
- The customer's details, including name, address, and GSTIN.
- All the details of goods which include a description of the product, the actual price of the product the customer needs to pay, quantity, and tax applied.
- Terms and dates of payment, mode of payment, and shipping terms if needed.
Difference Between Delivery Challan And Invoice
The GST implementation and the ownership are the main differences between delivery challan vs invoice. Other than these elements, here are also some other differences:
| Delivery Challan | Invoice |
|---|---|
| Delivery challan is generated during the transportation of goods. It is used as proof of goods movement in the supply chain and logistics. | An invoice served as a formal request for payment after the completion of goods transactions. |
| It is issued when the inventory has to be moved, but the manufacturer does not have an invoice. | The invoice is issued when an actual sale is made. |
| A dispatch or delivery challan includes product quantity, delivery details, and supplier and buyer’s information. | You need to define invoice with the details of transaction information, including cost and taxes, for the proper delivery of goods. |
| It helps companies make sure to maintain transparency in goods movements. | It is used to maintain accounting records and tax compliance. |
Automate Your Delivery Challan And Invoice Creation With TranZact
Delivery challan and invoice, both are important documents for conducting a smooth supply chain process and managing accounts for the manufacturing business. By understanding the differences between delivery challan vs invoice, you can tackle the legal issues of GST and mistakes in accounting. But, manual handling of these documents can be difficult. You can instead use software to generate both documents automatically.
TranZact is a tool that can automate your delivery challan and invoice generation while reducing errors in accounting functionality. It creates a template of dispatched and invoice slips where you can automate the data entry through a specific module the software provides. You can easily share these slips through emails and WhatsApp during or after the fulfillment of an order with your customers.
Speed up your supply chain process with TranZact, which is specially designed for Indian manufacturers to manage everything from inquiry to dispatch.
FAQs
1. What is the difference between delivery challan and invoice?
The difference between a delivery challan and an invoice is that a delivery challan is issued before or during the movement of goods without an actual sale. An invoice is generated against a sale after the order is fulfilled, and it includes the transactional value.
2. What is the purpose of delivery challan?
The purpose of delivery challan are:
- To maintain an official record of transportation.
- It helps in tracking the movements of goods.
- The delivery challan helps verify the content of goods and monitors missing items due to theft or damage.
- It acts as legal proof when immediate sales or payment is not involved.
- It helps in inventory management through inventory tracking of dispatched goods.
3. Is delivery challan a valid document?
Yes! Delivery challan is a valid document because it falls under GST regulation and provides ongoing communication between the supplier and the recipient.
4. Is delivery challan taxable under GST?
No, the delivery challan is not always taxable under GST. It is issued when goods are transported without immediate sales or no tax liability arises. However, tax may arise when an invoice is generated for the sale of goods.
5. Is a delivery ticket the same as an invoice?
No, the delivery ticket is not the same as the invoice, as both documents are issued for different purposes. The delivery ticket is proof of product received at the buyer's end and is issued before or during the transportation. It may include a description of the supplied item, quantity, delivery date, supplier, and recipient information. On the other hand, an invoice is issued for the goods sold that contains a full product description along with applied taxes.
6. What is the difference between delivery note and delivery challan?
The key difference between delivery notes and delivery challans is that a delivery note is an acknowledgment of goods receipt, whereas delivery challans have records of inventory levels along with all the details needed to dispatch the product.
