GST on Free Samples Given to Doctors, Dealers or Customers: ITC Reversal and Documentation
By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026
2-minute summary
- A zero-price sample is not automatically a zero-tax event: first test Schedule I, then test blocked ITC under section 17(5)(h).
- Circular 92 treats genuine free samples differently from a single-price promotional bundle such as buy-one-get-one.
- Doctor/dealer sample registers should identify SKU, batch, recipient category, quantity, cost and the ITC reversal methodology.
- Where stock is moved to another GSTIN of the same PAN, distinct-person rules can make the transaction a supply even without consideration.
Current position
Control and evidence map
| # | Control / evidence requirement | |
|---|---|---|
| 1 | Create a promotion code separating true samples from discounted or bundled sales. | |
| 2 | Map purchase/manufacturing ITC attributable to the sample pool and document the reversal basis. | |
| 3 | Capture recipient, batch/serial, quantity and distribution approval for sensitive sectors such as pharmaceuticals. | |
| 4 | Check whether the recipient is a distinct/related person before treating the dispatch as a non-supply. | |
| 5 | Reconcile sample stock movement to inventory write-off and GST return workings. | |
Worked example
A pharma company manufactures 10,000 strips and distributes 400 strips as physician samples without charge. The 400-strip pool should be separately identified in inventory, and ITC attributable to those free samples should be reversed under the statutory rule unless the dispatch falls within a taxable Schedule I scenario. The company should not simply book the cost to marketing and leave the GST ledger untouched.
Common mistakes
- Calling every promotion a free sample even when a single bundled price is charged.
- Failing to reverse attributable ITC on genuine free samples.
- Ignoring Schedule I when stock goes to another GSTIN of the same legal entity.
- Keeping no recipient/batch trail for regulated products.
Frequently asked questions
Is GST output tax payable on every free sample?
No. Genuine samples without consideration generally are not supplies unless Schedule I applies.
Is ITC still available?
Section 17(5)(h) blocks credit to the extent goods are disposed of as gifts or free samples.
Is buy-one-get-one the same as a free sample?
Not necessarily; Circular 92 treats a single-price bundle differently.
What evidence matters most?
Promotion approval, SKU/batch list, recipient data, cost base and the ITC reversal working.
Official sources
- Central Board of Indirect Taxes and Customs - Central Goods and Services Tax Act, 2017 (current statutory text)
- CBIC - Circular No. 92/11/2019-GST - Sales promotion schemes (2019-03-07)
Disclaimer
Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.