Tax Invoice Vs Delivery Challan: What are the main differences?

This article will help you understand tax invoices and delivery challans and how to distinguish these documents from each other.

What is a Tax Invoice?

A tax Invoice, also known as a Sales Invoice, is a legal document that the seller issues to a buyer, and it includes the details such as:

• Date of the invoice
• Supplier's name, address and GSTIN
• Customer name, address and GSTIN
• Supplier's company logo
• All the details of goods and services, such as
• Description
• The actual price that the customer has to pay on time
• Quantity
• Tax % applied
• Terms and dates of payment
• Payment method
• Payment terms and conditions
• Shipping terms if they need
  

Suppliers can create a tax invoice before or after the said goods or service has been delivered to customers.

Invoice is vital for accounting as it gives us information about sales transactions.

To create the invoice, you need accounting software like Kernel. The Kernel allows you to share invoices directly with the customer on their E-mail.

In order to ensure that an invoice has been paid, the invoice number should be stated on the sales receipt. This should be matched to the sales receipt in the accounting software. The customer's accounts receivable account is debited for the payment.

If you need more details about the Tax Invoice? Visit the article - Comprehensive Information - What is a GST Tax Invoice? | Meaning, Examples, Templates

What is a Delivery Challan?

A Delivery Challan is a formal document created when goods are transported from one place to another. It is also needed for accounting processes. It should include the following information as

• Customer's name and address
• Supplier's name and address
• Date of the delivery
• The description of the goods and quantity
• Item code

Suppliers should send it together with the shipment of goods or services. As soon as the customer accepts the delivery challan, he acknowledges receipt of the goods.

Wondering how Delivery Challan works? Read the article - Everything you need to know about a delivery challan Free Template.

The difference between Delivery Challans and Tax Invoices

Here are the main differences between the Delivery Challan and Tax Invoice:

• An invoice serves as proof of ownership, with all its risks and liabilities; It shows the actual value of the goods.
• Delivery challan shows that the customer has accepted the receipt of goods but does not show their legal responsibilities or ownership. A delivery challan is used mainly during the transportation or delivery of goods from one location to another, noting the description, condition, and quantity of the goods, but this may not lead to a sale. A delivery challan can mention the value of the goods but will not include the tax.