BOGO: Buy One Get One Free Schemes Under GST

BOGO explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The word "free" on the pack is marketing, not tax law. The customer pays one consolidated price for the whole bundle, so nothing is supplied without consideration — which is why a BOGO scheme neither triggers the free-sample block nor escapes the composite-and-mixed analysis.

Per CBIC Circular No. 92/11/2019-GST dated 07.03.2019, BOGO arrangements "are not free supplies in the legal sense. The economic reality is that the customer pays a single consolidated consideration for the entire bundle of products." GST is payable on the entire transaction value charged, and the scheme is analysed under section 8 — composite supply where the items are naturally bundled, mixed supply where they are not. ITC is not required to be reversed on the "free" units.

Why the ITC block does not apply

The Guide's illustration is direct:

"An FMCG company offers a 'Buy 2 Packs, Get 1 Free' scheme on a cooking oil brand during the festive season. As per CBIC Circular No. 92/11/2019-GST… where the additional quantity is supplied as a trade discount and is part of the same transaction (i.e., the price of 2 packs effectively covers all 3), ITC is not required to be reversed on the 'free' third pack. This is because the transaction is treated as a supply for consolidated consideration and not a supply without consideration."

Contrast this with a genuine free sample. A 5 ml shampoo sachet handed out door-to-door has no consideration at all, so section 17(5)(h) blocks the credit. A third oil pack given against payment for two is part of a priced supply, so the credit stands. Free samples and section 17(5)(h) →

The distinguishing feature is not generosity but consideration. Whether the customer paid for the item is the whole question, and in a BOGO the answer is yes — at a lower effective per-unit price.

Identical products: the simple case

The Guide's examples of the common forms:

• "Buy One Soap, Get One Soap Free"
• "Buy One Shampoo, Get One Shampoo Free"
• "Buy One Shaving Cream, Get One Shaving Foam Free"
• "Buy One Biscuit Pack, Get Another Pack Free"

Where the products are identical, "the transaction effectively represents supply of two units of the same product for a single consideration. GST is payable at the rate applicable to that product."

No section 8 analysis is needed — there is only one rate in play.

And the effective value is simply what was charged. Two soaps for the price of one is a supply of two soaps valued at that price; the discount is built into the price rather than granted afterwards, so section 15(3)(a) is satisfied on the face of the invoice.

Different products: back to section 8

"More complex issues arise where different products are bundled together. For instance an FMCG company may offer a toothpaste along with a toothbrush, a shaving cream along with a shaving foam, or a packet of chips along with a toy."

The bundle must then be characterised:

• naturally bundled and supplied together in the ordinary course of business — a composite supply under section 2(30), taxed at the principal supply's rate;
• not naturally bundled, independently capable of separate supply — a mixed supply under section 2(74), taxed at the highest rate among the components under section 8(b).

The three examples sit at different points on that line. Toothpaste with a toothbrush has a genuine consumer-expectation and interdependency argument. Shaving cream with shaving foam is two substitutes bundled for promotion — hard to call naturally bundled. Chips with a toy is the clearest mixed supply of the three: the toy is a distinct, independently marketable good with no functional relationship to the snack. The natural bundling tests →

And the rate exposure is asymmetric. Getting a composite supply wrong costs the difference between two rates on the ancillary. Getting a mixed supply wrong costs the highest rate on the whole bundle — which is why the chips-and-toy structure is the one to price carefully before launch.

What to document before a scheme launches

The scheme circular itself. Establishing that the additional quantity is supplied as part of the priced transaction, not as a separate gratuitous transfer.

The invoice. A BOGO is a pre-supply discount recorded in the invoice — section 15(3)(a) — so the invoice should show the quantity supplied and the consolidated price, not a "free" line at nil value against which a department could argue a separate unpriced supply.

The bundling analysis, where products differ. Contemporaneous reasoning on why the bundle is composite, keyed to consumer expectation, industry practice and interdependency — because the Guide is explicit that natural bundling is "a question of fact that may vary across jurisdictions, industries and periods of time", and "evolving marketing strategies… may alter the character of a supply over time."

And separate pricing as the fallback. Where the bundle is plainly mixed and the rate differential is punitive, pricing each component separately on the invoice takes the transaction out of section 2(74) entirely — a mixed supply requires a single price, and each item is then taxed on its own.

Key takeaways

• A BOGO is not a free supply — the customer pays a single consolidated consideration for the whole bundle.
• Circular No. 92/11/2019-GST is the authority; ITC on the "free" units is not reversed.
• The distinction from a free sample is consideration, not generosity.
• Identical products — one rate, no section 8 analysis needed.
• Different products — characterise as composite (principal supply's rate) or mixed (highest rate on the whole bundle).
• A BOGO is a pre-supply discount under section 15(3)(a), recorded in the invoice.
• Where the bundle is plainly mixed, separate pricing on the invoice avoids section 8(b) altogether.

Read next

• Composite Against Mixed Supply: FMCG Combos and Gift Boxes
• Free Samples and Gifts: Section 17(5)(h) Against Schedule I Entry 1
• Post-Sale Discounts: Section 15(3)(b) and the Finance Act 2026 Change

Disclaimer: Positions stated as on 5 September 2026, based on sections 2(30), 2(74), 8, 15(3)(a) and 17(5)(h) of the CGST Act, 2017 and Circular No. 92/11/2019-GST dated 7 March 2019, as reproduced in the ICAI GST Sectoral Guide on Fast-Moving Consumer Goods (July 2026, updated with Finance Act, 2026 amendments).