Invoice for Free Samples under GST

A free sample sent to a customer, with nothing charged, is usually not a tax invoice under GST. The goods move on a delivery challan. A tax invoice is the document when the law treats that sample as a supply even though nobody paid. For a factory, that is mostly a sample sent to your own GST registration in another State, or to a related person.

The phrase "invoice for free samples under GST" is what people search. The document the rules name, in the ordinary case, is the challan.

Which document to raise

Sources for this table are listed at the end. The rows are the reading of those sources for a manufacturer. Your CA applies them to the actual party.

When a free sample is not a supply

Section 7(1)(a) of the CGST Act defines supply to include the forms of supply made or agreed to be made for a consideration, in the course or furtherance of business.

Circular No. 92/11/2019-GST, dated 7 March 2019, paragraph A, uses drug samples as the example and then states the rule: goods supplied free of cost, without any consideration, are not a supply under GST, except where the activity falls in Schedule I of the CGST Act. CBIC still lists this circular. It has not been withdrawn.

So a bottle, a garment, a machined part, or a packet of product that you hand to an unrelated dealer and do not charge for is not a supply, unless Schedule I pulls it in. There is no GST on that movement. There is also no tax invoice, because a tax invoice under section 31 is for a supply.

Do not raise a tax invoice at zero value for this case. A zero-value tax invoice looks like an undervalued supply, and if e-invoicing applies to your GSTIN it asks the portal for an invoice reference number on a transaction that Circular 92 says is not a supply.

When Schedule I makes it a supply anyway

Schedule I of the CGST Act lists activities treated as supply even if made without consideration. Three entries matter on a factory desk:

Distinct persons. Section 25(4) and section 25(5) treat each of your GST registrations, and your establishments in different States, as distinct persons. A sample that moves from your Tamil Nadu GSTIN to your Karnataka GSTIN, in the course of business, is a supply even though no money moves. That one needs a tax invoice.

Related persons. The explanation to section 15 defines who is related (group companies, and certain other relationships). A sample sent free to a related person, in the course of business, is a supply under Schedule I. Tax invoice.

Business assets. Schedule I also covers a permanent transfer or disposal of business assets on which you have taken input tax credit. That is a different case from a product sample cut from trading stock. If you are giving away a machine or another business asset, ask your CA before you treat it as a challan movement.

Employees. Schedule I's entry on related and distinct persons has a proviso: gifts from an employer to an employee are not treated as a supply if the value in a financial year does not exceed ₹50,000. Product handed to your own staff can fall under that gift rule. Above the limit, it can be a supply. Confirm the year's total with your CA.

A dealer who only receives a sample to try is not, by that fact, your agent. Schedule I has a separate entry for certain principal-and-agent movements. If that dealer will supply the goods onward on your behalf, stop and ask your CA. That is not the ordinary sample.

Delivery challan: the ordinary free sample

Rule 55 of the CGST Rules covers transportation of goods without an invoice. One of the cases is transportation of goods for reasons other than by way of supply. The rule says the consigner may issue a delivery challan, in lieu of an invoice, at the time of removal. The serial is not to exceed sixteen characters, in one or more series.

The challan contains:

• date and number of the delivery challan
• name, address, and GSTIN of the consigner, if registered
• name, address, and GSTIN or UIN of the consignee, if registered
• HSN and description of the goods
• quantity (provisional, where the exact quantity is not known)
• taxable value
• tax rate and tax amount, where the transportation is for supply to the consignee
• place of supply, in case of inter-State movement
• signature

For a sample that is not a supply, the tax-rate line is not the case the rule describes. The taxable-value line still is. Write a value. A blank value gives the vehicle nothing to show.

Sub-rule (2) says that, in the case of supply of goods, the challan is prepared in triplicate: original for the consignee, duplicate for the transporter, triplicate for the consigner. A sample that is not a supply is outside that sentence. Send a copy with the goods anyway. Rule 138A says the person in charge of the conveyance carries the delivery challan.

The rules do not prescribe the words "free sample". What they list are the fields above. Factories often also write, on the face, that the goods are samples supplied without consideration and are not a supply except where Schedule I applies. That sentence helps a road check. It is a practice, not a sentence the rule quotes. Ask your CA if you want it printed.

Give delivery challans their own serial series. Rule 55 allows one or more series, and the serial must stay within sixteen characters. A series of its own keeps a sample out of the tax-invoice list. A non-supply is not an outward supply, so it is not reported as one in GSTR-1. A Schedule I supply is reported, because it is a supply. Your CA files the return.

This challan is the same kind of document the rules use for job-work movement, and it is a different document from a sale. Keep the series, the stock ledger, and the GST return aligned. E-invoicing applies to tax invoices for notified persons. It is not the route for a challan that exists because there is no supply.

Tax invoice and valuation, when it is a supply

When Schedule I applies, section 31 requires a tax invoice. The particulars are in Rule 46: supplier GSTIN, a serial unique for the financial year, date, recipient, HSN, description, quantity, taxable value, rate, tax amount, place of supply for an inter-State supply, and signature. If e-invoicing applies to that GSTIN, that tax invoice needs an invoice reference number before you treat it as done. Thresholds have changed over time. Confirm the current notification with your CA. Do not copy an old turnover figure off a WhatsApp forward.

Nobody paid, so the value is not a normal selling price under section 15. Rule 28(1) of the CGST Rules sets the value for a supply between distinct persons, or between related persons, other than through an agent:

1. Open market value.
2. If there is no open market value, the value of goods of like kind and quality.
3. If the value is still not determinable, Rule 30 or Rule 31, in that order. Rule 30 is 110 percent of the cost of production or manufacture, where it applies.

Two provisos sit on that rule:

• If the recipient will supply the goods further, as they are, you may value them at 90 percent of the price the recipient charges an unrelated customer for goods of like kind and quality.
• If the recipient is eligible for full input tax credit, the value declared on the invoice is deemed to be the open market value.

Circular No. 210/4/2024-GST says that second proviso applies to supplies of goods or services or both between distinct persons and between related persons, where full input tax credit is available to the recipient.

Read "full input tax credit" against the sample itself. If the other branch will give the goods away as free samples, section 17(5)(h) and Circular 92 can block that branch's credit. In that case the invoice value is not automatically the open market value. Fall back to the open market value of the same product, which is the price you charge an unrelated customer, GST excluded. If you have no such price, like-kind value, then Rule 30. This is the point to put in front of your CA before the invoice is raised. A casual ₹1 on the invoice is not a method the rule describes.

Rule 28(2) is about corporate guarantees to a bank. It is not the valuation rule for a carton of samples.

Input tax credit

Section 17(5)(h) of the CGST Act says input tax credit is not available on goods lost, stolen, destroyed, written off, or disposed of by way of gift or free samples.

Circular 92, paragraph A(ii), applies that block to the supplier's inputs, input services, and capital goods to the extent they are used for gifts or free samples distributed without consideration. The same paragraph says that where Schedule I makes the distribution a supply, the supplier is eligible for the credit.

For the ordinary sample — unrelated dealer, nothing charged — work out the credit that belongs to the quantity you gave away, and reverse it if you have already taken it. The reversal belongs in the GSTR-3B input-tax-credit reversal that covers section 17(5). Your CA chooses the working. A quantity ratio (sample pieces ÷ pieces made on that line) is one way to measure "to the extent" when the sample came off the same batch. It is a measure of use. It is not a formula printed in the circular.

Where the sample is a Schedule I supply and you pay GST on the tax invoice, Circular 92 says you, the supplier, can keep the credit. The recipient's credit is a separate question and depends on what they do with the goods.

What the GST Council said on 8 October 2026

The 57th GST Council meeting was held in New Delhi on 8 October 2026. The Press Information Bureau release, PRID 2320934, is also hosted by the GST Council as its press release of that date.

Paragraph 9 of that release says the Council recommended an amendment to section 17(5) of the CGST Act to remove the restrictions on input tax credit on, among other things, free samples. The release says this is to reduce cascading. It calls the change a recommendation to amend the Act. It does not say the amendment is already in force. It gives dates for some other items in the same meeting, including refund of accumulated credit on input services from 1 November 2026. It does not give a date for the free-sample credit change.

Until your CA confirms that the amended section 17(5) has been enacted and notified, for CGST and for the State GST that matches it, keep following section 17(5)(h) and Circular 92. A recommendation is not a ground to stop a reversal.

E-way bill

Rule 138 requires e-way bill information in Part A of FORM GST EWB-01 before movement of goods when the consignment value exceeds ₹50,000. The rule covers three situations: movement in relation to a supply, movement for reasons other than supply, and inward supply from an unregistered person. A free sample is in the second situation when it is not a supply, and in the first when Schedule I makes it one.

Explanation 2 to Rule 138 defines consignment value as the value, determined under section 15, declared in the invoice, bill of supply, or delivery challan, and it includes the central tax, State or Union territory tax, integrated tax, and cess charged in that document, if any. That is why the challan cannot go out with the value left blank.

Some States notify a different limit for movement inside that State. Check the limit for the State the vehicle is moving in. The person in charge of the conveyance carries the challan or the tax invoice, and the e-way bill where the rule requires it.

A paid "free" piece is a different case

Circular 92, in the paragraph after free samples, deals with buy-one-get-one offers. Those are not samples supplied free of cost. They are two or more individual supplies for a single price. GST follows that supply. Raise a tax invoice for the price you charged. Input tax credit on that supply is available, as the circular says, because it is not a gift or a free sample.

If your price list says "one piece free" but the invoice has a price and a customer, you are in this paragraph, not in the challan paragraph.

A practical sequence at the gate

1. Name the recipient. Unrelated customer, your other GSTIN, related company, or your own employee.
2. If nothing is charged and the recipient is an unrelated customer, raise a delivery challan under Rule 55. Do not raise a tax invoice.
3. If the recipient is your other GSTIN or a related person, raise a tax invoice and value it under Rule 28. Ask your CA before you rely on the "full credit" proviso.
4. Write a taxable value on the document. Generate the e-way bill before the vehicle moves when the consignment value crosses the limit that applies.
5. Reduce finished-goods stock by the sample quantity.
6. For a non-supply sample, reverse input tax credit to the extent of that quantity. For a Schedule I supply, follow Circular 92 on the supplier's credit, and let the recipient's CA decide their side.
7. Keep the challan series out of GSTR-1. Report the tax invoice.

Sources

Checked on 9 October 2026.

• Circular No. 92/11/2019-GST, 7 March 2019 — free samples are not a supply except Schedule I; input tax credit blocked to the extent of use; credit allowed to the supplier where Schedule I applies. Still listed by CBIC.
• CGST Act, 2017 — section 7 (supply for a consideration), section 17(5)(h) (credit blocked on gifts and free samples), section 25(4) and 25(5) (distinct persons), section 31 (tax invoice), Schedule I (supply without consideration, including the ₹50,000 employee-gift proviso).
• Rule 55, CGST Rules — delivery challan in lieu of an invoice for transportation other than by way of supply, sixteen-character serial, and the fields it contains. Rule 46 is the tax-invoice particulars.
• Rule 28, CGST Rules — value between distinct or related persons, the 90 percent option, and the full-credit deeming proviso.
• Circular No. 210/4/2024-GST — the full-credit proviso to Rule 28(1) applies to goods and services between distinct or related persons where the recipient is eligible for full input tax credit.
• Rule 138, CGST Rules — e-way bill (FORM GST EWB-01) for movement in relation to a supply and for reasons other than supply, when consignment value exceeds ₹50,000. Explanation 2 defines that value. Rule 138A says the conveyance carries the challan or the tax invoice.
• PIB press release, 8 October 2026, PRID 2320934, also on the GST Council site — recommendation to amend section 17(5) so that the input-tax-credit restriction on free samples is removed. A recommendation to amend the Act, with no effective date stated for this item.

Related guides

• Job work under GST — the other common delivery-challan movement
• How to generate an e-invoice
• What an e-invoice is for manufacturers
• GST compliance for manufacturing MSMEs
• GST invoicing — start a free trial

Frequently asked questions

Do I issue a tax invoice for free samples under GST?

When the sample is given free, with no consideration, to a person who is not related to you and is not your other GST registration, it is not a supply. Circular No. 92/11/2019-GST says so, except where Schedule I applies. Those goods move on a delivery challan under Rule 55, not on a tax invoice.

When is a tax invoice required for a free sample?

When Schedule I treats the movement as a supply even though nobody paid. The usual factory case is a sample sent to your own GST registration in another State, or to a related person, in the course of business. Section 31 then requires a tax invoice, and Rule 28 fixes the value.

Can a manufacturer claim input tax credit on free samples?

Section 17(5)(h) blocks credit on goods disposed of by way of gift or free samples. Circular 92 extends that, in the clarification, to inputs, input services, and capital goods to the extent they are used for samples given without consideration. Where Schedule I makes the distribution a supply, the circular says the supplier can take the credit. On 8 October 2026 the GST Council recommended an amendment to remove the block on free samples. That recommendation is not in force until the Act is amended and notified.

What value do I write on a free-sample delivery challan?

Rule 55 requires a taxable value on the challan. Rule 138 uses the value declared on the challan, including any tax shown, for the e-way bill test. The central threshold is a consignment value above ₹50,000, and it covers movement for reasons other than supply. Some States set a different limit inside the State.

Is a buy-one-get-one offer a free sample under GST?

Circular 92 treats it as two or more items supplied for one price. It is a supply. Raise a tax invoice for that supply. Do not move it as a zero-value sample.

Confirm the document with your chartered accountant. This page is not legal advice.