A free subscription IAP (In App Product) need to be created in iTunes (developer account) for your app just like any other IAP and there must be an option in app from where user can see that subscription and select to subscribe.
It seems like there is no option (like a button "Subscribe for Free" etc) in your App to subscribe to your magazine. Subscription availability is required by Apple for all Newsstand apps. On tapping Free subscription option (e.g. a button) a normal In App purchase (though free) should happen.