Free Samples Under GST: Invoice or Delivery Challan?

The short answer

If you hand out samples free of charge to someone unrelated to you — a shop you hope to sell to, a dealer evaluating your product — then under GST:

• No GST is payable on them.
• No tax invoice is issued.
• The goods move on a delivery challan.
• The input tax credit on those goods is not available, and must be reversed if you already took it.

The rest of this guide explains each point, and the cases where a “free” item is in fact taxable.

Why a free sample is not a supply

GST is charged on a supply, and Section 7 of the CGST Act defines a supply as one made for a consideration in the course of business. A sample given away for nothing has no consideration, so it is not a supply.

CBIC confirmed this for sales promotion in Circular No. 92/11/2019-GST (7 March 2019): goods given free of cost as samples or gifts are not a supply under GST, unless they fall under Schedule I.

That one exception matters, so check it first.

The exception: related persons and your own branches

Schedule I of the CGST Act lists transactions that are a supply even without consideration. Two of them catch samples:

1. Related persons. Samples sent free to a related company, a partner’s firm, or anyone else who counts as related under GST are a supply.
2. Distinct persons. Each of your own GST registrations, usually a branch in another state, is a separate person under GST. Samples sent from your Gujarat GSTIN to your Maharashtra branch are a supply, with IGST.

In both cases you issue a tax invoice, and the value is worked out under the valuation rules (Rule 28) rather than taken as zero. There is one relief for staff: gifts from an employer to an employee worth up to ₹50,000 in a year are not treated as a supply.

Which document goes with the goods

For samples that are not a supply, the document is a delivery challan. Rule 55 of the CGST Rules allows a challan for the “transportation of goods for reasons other than by way of supply”, which is exactly this case.

The challan must carry, among other things:

• Challan number and date
• Your name, address and GSTIN
• The recipient’s name and address, and GSTIN if registered
• HSN code, description and quantity of the goods
• Taxable value, even though no tax is charged
• Place of supply, if the goods cross a state border
• Your signature

Print it in three copies: the original for the recipient, the duplicate for the transporter and the triplicate for your file. The triplicate is your evidence, in an audit, of why the stock left without a sale.

The free challan maker produces a Rule 55 challan as a PDF without signing up. For every field in detail, see Delivery challan format and Rule 55.

Input tax credit has to go back

This is the part most businesses miss. Section 17(5)(h) blocks input tax credit on goods that are “disposed of by way of gift or free samples”.

So if you bought or made 100 units, claimed credit on all of them, and gave 10 away as samples, the credit on those 10 units has to be reversed. Report it in GSTR-3B, Table 4(B)(1), which covers reversals under Section 17(5).

For samples you make yourself, the credit to reverse is on the inputs that went into those units, not on the finished goods.

Change on the way (October 2026). The 57th GST Council meeting on 8 October 2026 is reported to have recommended amending Section 17(5) to remove the block on input tax credit for free samples, along with outdoor catering, health and life insurance, and goods destroyed or written off on expiry of shelf life. It is a recommendation: the credit stays blocked until the CGST Act is amended, so keep reversing it until then. Confirm the current position with the official notification or your CA. What the 57th meeting decided.

When “free” is not free

Buy one, get one free. Circular 92/11/2019-GST says this is not a free supply. The customer pays for both items together, so it is a single supply of two items at the price charged. Both items go on the tax invoice, GST is charged on the price actually charged, and input tax credit on the “free” item stays available.

Samples the customer pays for. If the “sample” is billed, even at a token price, it is a sale like any other and needs a tax invoice. The free GST invoice generator makes one in a minute.

Goods sent on approval. If you send goods for the customer to try and buy if they like them, that is not a free sample either. They travel on a delivery challan, and must be invoiced or returned within six months.

E-way bill for samples

An e-way bill is needed for the movement of goods worth more than ₹50,000 whether or not there is a sale. A large consignment of samples, such as a stock of display units sent to a new dealer, needs one, with Delivery Challan as the document type. See E-way bill rules, validity and limits.

Checklist

1. Is the recipient a related person, or your own GSTIN in another state? If yes, issue a tax invoice.
2. Otherwise, send the samples on a delivery challan in triplicate.
3. Reverse the input tax credit on the samples in GSTR-3B Table 4(B)(1).
4. Generate an e-way bill if the consignment is worth more than ₹50,000.
5. Keep a register of samples issued, so the stock that left without a sale can be explained.