At Diwali the offer is a commercial decision. What it costs you in GST is decided somewhere else entirely: on the invoice. The same festive sale can land four different ways, and the only thing that separates them is how the offer is written on the bill. Updated October 2026.
Twelve lines with HSN or SAC, quantity, rate and a discount against the line it applies to. GST splits into CGST and SGST or charges as IGST depending on the supply type you pick. Totals, round off and the invoice total calculate themselves, and an empty form stays empty instead of printing a bill for zero rupees.
This is the sheet's reason to exist. Section 15(3)(a) excludes a discount from the value of supply only if it is recorded in the invoice issued for that supply. A poster is not an invoice. The discount per cent and the discount amount sit on the line, and the taxable value recalculates underneath.
Five rows: a flat discount, buy more save more, buy one get one free, the free gift with purchase, and the discount you decide after the sale. For each one, what goes on the invoice, what happens to GST, what happens to your input tax credit, and which paragraph of the circular says so.
The one that costs the most. A free gift is not a supply at all, so there is no GST on it, which makes it look like the cheapest offer to run. Section 17(5)(h) then blocks the input tax credit on it. The offer is not free; the cost moved to a line you only see in the return.
A Diwali sale of five lines with a buy-more-save-more slab shown on the invoice, so you can see the formulas carrying real numbers before you trust them with yours. Gross, slab discount, taxable value, tax split and the invoice total, with the amount in words.
Sections 15(3)(a) and 15(3)(b), 7(1)(a), 8, 17(5)(h) and 34(1), entries 1 and 2 of Schedule I, the four paragraphs of Circular 92/11/2019, and the later circular that withdrew the one people find when they search post-sale discounts. Quoted with the practical effect beside each, so you can check this against the source rather than take our word for it.
Petpooja Invoice raises GST-compliant invoices with the tax calculated automatically, so a Diwali discount, the HSN and the CGST and SGST split land on the bill without anyone working them out at the counter.
Explore Petpooja InvoiceEvery Diwali, the same conversation happens twice. First in the shop, where someone decides the offer: twenty per cent off, a free diya set, two boxes for the price of one. Then at the counter, where someone has to turn that into a bill. The second conversation is the one that decides what you pay, and it is usually had by whoever is standing at the till.
Start with the discount, because it is the one most often got wrong. Section 15(3)(a) of the CGST Act excludes a discount from the value of a supply only where it is given before or at the time of the supply and has been duly recorded in the invoice issued in respect of that supply. Both halves matter. Announce the offer on a poster, take twenty per cent less at the counter, and raise the bill for the full amount, and you have paid GST on money that never reached you. The discount is not a marketing line. It is an invoice line.
A staggered offer works the same way. In Circular 92/11/2019-GST the Board takes the familiar festive structure as its example, ten per cent above five thousand rupees and more above ten, and records that such discounts "are shown on the invoice itself". So buy more, save more is billed exactly like a flat discount: the slab that actually applied goes on the line.
Then the free gift, which is where the money quietly goes. The same circular confirms that goods given free of cost, without any consideration, are not a supply at all, so there is no GST to charge on the diya set. What it also says, in the same paragraph, is that section 17(5)(h) disallows input tax credit on goods disposed of by way of gift or free samples. The gift is not taxed and the credit on it is gone. That is the real price of the offer, and it does not appear anywhere until the return.
Two cases in Schedule I pull a giveaway back inside GST, and both are live at Diwali. The first is staff gifts: the proviso to entry 2 keeps a gift from an employer to an employee outside GST only up to fifty thousand rupees in value per employee in a financial year, and above that it is treated as a supply even though nothing was charged. The second is entry 1, which treats the permanent disposal of business assets as a supply where input tax credit has been availed on them. So goods you claimed credit on and then gave away are not outside GST at all. If your Diwali giving runs to staff as well as customers, that is the line to check before you buy.
The one almost everybody mis-bills is buy one get one free. It feels like a free item, so it gets billed as a zero-rupee line. The circular is blunt: it "is not an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply". Two goods for the price of one. The tax follows section 8, as a composite or a mixed supply, and the circular confirms that input tax credit stays available. List both items, charge the one price.
Last, the discount nobody planned. If you decide after the sale that a customer should have paid less, the invoice is already issued and cannot be rewritten. That is a secondary discount in the circular's language, and it runs through a credit note under section 34(1), which says the supplier "may issue" one. Read section 15(3)(b) before you promise it, though, because the credit note is only half the condition: the discount leaves the value of supply only if the note is issued and the input tax credit attributable to it has been reversed by the recipient. That second half is the buyer's action, not yours, so it is worth agreeing before the offer is made rather than after. Our Credit and Debit Note Management template covers the mechanics and the outer date for the tax adjustment.
None of this decides your offer. A discount, a gift and a buy-one-get-one can all be the right commercial answer in different shops, and our guides to Diwali offers that increase sales and Diwali menu ideas cover choosing it. What the law decides is what each one does to your taxable value and your credit once you have chosen, which is worth knowing before the rush rather than after it. If you want the full set of billing formats rather than the festive one, our GST Invoice Template Pack carries the tax invoice, the bill of supply and the export invoice; our guide to GST billing covers the day-to-day side.
Here's a preview of what you'll get inside:
Where a discount has to be recorded to be left out of the value of supply. Section 15(3)(a) excludes it only where it is given before or at the time of supply and has been duly recorded in the invoice issued for that supply. A poster does not count.
Source: CGST Act 2017, section 15(3)(a), read 06-Oct-2026What CBIC settled in a single circular: free samples and gifts, buy one get one free, discounts including buy more save more, and secondary discounts decided after the supply. The workbook splits the third into a flat and a slab discount, so its table runs to five rows.
Source: Circular No. 92/11/2019-GST, 07-Mar-2019, read 07-Oct-2026The input tax credit on a free gift. Section 17(5)(h) disallows credit on goods disposed of by way of gift or free samples, and the circular says so in terms. No GST on the giveaway, no credit on it either.
Source: CGST Act 2017, section 17(5)(h), read 07-Oct-2026The commonest and the most expensive. Section 15(3)(a) leaves a discount out of the value of supply only where it is recorded in the invoice issued for that supply. Take twenty per cent less at the counter, raise the bill for the whole amount, and you have paid GST on money you never collected. Put the discount on the line.
A gift given for no consideration is not a supply, so it does not belong on the invoice as a line at all. Recording it at zero invites the question of what it was and why it was valued at nothing. Keep it in your stock records, note the offer on the bill if you want the customer to see it, and leave the line off.
Circular 92/11/2019 is explicit that this "is not an individual supply of free goods but a case of two or more individual supplies where a single price is being charged". Two goods for the price of one, taxed through section 8. Both items go on the invoice, against the single price you charged.
Section 17(5)(h) blocks credit on goods disposed of by way of gift or free samples, and the circular applies it to the inputs used in relation to those gifts. If the diya sets and calendars were bought to give away, the credit on them is not yours. Price the offer with that in it, not after. Our input tax credit entry covers the wider rule.
Once the invoice is issued it is the record. A discount you decide afterwards is what the circular calls a secondary discount, and it runs through a credit note under section 34(1). It only comes out of the taxable value if the buyer also reverses the input tax credit on it, which section 15(3)(b) requires. Reprinting the original bill with a new number is not a fix, it is two versions of the same invoice.
If the offer was ten per cent above five thousand and twenty above ten, and the bill just says "discount", you have lost the link between the offer and the line. The circular's example is a slab offer precisely because that is what shops run at Diwali. Show the slab that applied.
A hamper sold for one price is taxed under section 8. If the items are not naturally bundled it is a mixed supply, and the section treats it as a supply of the item that attracts the highest rate of tax. One high-rate item can carry the whole box. The free GST rate finder is the quickest way to check before you pack it, and your accountant's view is worth having on a specific hamper.
| Aspect | Billed by habit | With this format |
|---|---|---|
| The festive discount | Announced at the counter, billed at full price | On the line it applies to, so it leaves the taxable value |
| A slab offer | Printed as one flat discount, or not at all | The slab that actually applied, shown on the invoice |
| A free gift | Billed as a zero-rupee line, credit claimed | Off the invoice, and the blocked credit priced in before the offer runs |
| Buy one get one free | Treated as one sale and one giveaway | Two items, one price, taxed under section 8 with the credit intact |
| A late discount | The original invoice is edited or reprinted | A credit note, which is what section 34(1) provides for |
| A gift hamper | Billed at the rate of the main item | Checked against section 8, because a mixed supply takes the highest rate |
| The evidence | A poster, a WhatsApp message and someone's memory | The invoice itself, which is what the section asks to see |
Swipe the table sideways to see the full comparison.
Download the free Diwali Sale GST Invoice Format and bill this festive season's offers the way the circular reads them.
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Petpooja Invoice raises GST-compliant invoices with the tax calculated automatically, generates e-invoices and IRNs, produces e-way bills where they are needed, and consolidates reporting across outlets. Ask for a walkthrough of how a Diwali discount reaches the invoice without anyone working it out at the counter.
