Gold is one of the most trusted assets in India. People buy gold not only for weddings and festivals, but also as an investment and savings option. When purchasing gold or jewellery, Goods and Services Tax (GST) applies to the transaction.
Understanding how GST works on gold helps buyers avoid confusion about pricing and bills and helps jewellers follow the correct tax rules.
This guide explains GST rates on gold, jewellery, making charges, gold coins, exchange of old gold, and GST rules for jewellers in simple language.
1️⃣ GST Rate on Gold in India
Under GST, the tax rate on gold in its basic form is 3%.
This applies to:
- Gold bars
- Gold biscuits
- Raw gold
- Gold coins
Whenever a person buys gold from a jeweller or authorized dealer, 3% GST is added to the value of gold.
Example
Suppose you purchase gold worth ₹1,00,000
| Particular | Amount |
|---|---|
| Value of Gold | ₹1,00,000 |
| GST @3% | ₹3,000 |
| Total Price | ₹1,03,000 |
So the buyer pays 3% GST on the gold value.
2️⃣ GST on Gold Jewellery
Gold jewellery includes items such as:
- Necklaces
- Rings
- Bangles
- Earrings
- Chains
- Bridal jewellery sets
The gold portion of jewellery is taxed at 3% GST.
However, jewellery pricing generally consists of two components:
- Value of gold used in the jewellery
- Making charges or labour charges
Both components are taxed separately under GST.
3️⃣ GST on Making Charges
Making charges are the cost charged by the jeweller for designing and manufacturing jewellery.
This includes:
- Craftsmanship
- Design work
- Labour charges
- Jewellery finishing
The GST rate on making charges is 5%.
Example of GST Calculation
Suppose you buy a gold necklace.
| Particular | Amount |
|---|---|
| Gold value | ₹80,000 |
| Making charges | ₹8,000 |
| GST on Gold @3% | ₹2,400 |
| GST on Making Charges @5% | ₹400 |
| Total Payable | ₹90,800 |
So the bill will include 3% GST on gold and 5% GST on making charges.
4️⃣ GST on Gold Coins
Gold coins are commonly purchased for investment or gifting during festivals such as Diwali and Akshaya Tritiya.
GST on gold coins is 3%.
Gold coins can be purchased from:
- Jewellery stores
- Authorized dealers
- Banks
Most banks sell 24-carat gold coins with purity certification.
5️⃣ GST on Exchange of Old Gold Jewellery
Many people exchange their old jewellery for new jewellery at a jeweller’s shop.
In such cases, the jeweller usually:
- Calculates the value of old gold
- Deducts that amount from the price of new jewellery
GST is applied on the full value of the new jewellery purchased.
Example
| Particular | Amount |
|---|---|
| Price of New Jewellery | ₹90,000 |
| Old Gold Value | ₹30,000 |
| Amount Payable | ₹60,000 |
GST will be calculated on ₹90,000, not on ₹60,000.
This is because the exchange is treated as a supply of new jewellery.
6️⃣ GST on Gold Purchased for Investment
Many people buy gold as an investment in the form of bars or coins.
In such cases:
- GST rate remains 3%
- GST becomes part of the purchase cost
- Individuals cannot claim any GST credit
GST credit is available only to registered businesses dealing in gold.
7️⃣ GST Rules for Jewellers
Jewellers who sell gold jewellery must comply with GST regulations.
GST Registration
Jewellers must obtain GST registration if their annual turnover exceeds the prescribed threshold limit.
Charging GST
A registered jeweller must:
- Charge 3% GST on gold jewellery
- Charge 5% GST on making charges
- Issue a proper GST invoice
Filing Returns
Registered jewellers must regularly file GST returns such as:
- GSTR-1 (details of outward supplies)
- GSTR-3B (summary return)
8️⃣ Input Tax Credit (ITC) for Jewellers
Jewellers can claim Input Tax Credit (ITC) on GST paid on certain purchases related to their business.
Examples include:
- Raw gold purchased from registered suppliers
- Packaging materials
- Business equipment and machinery
However, ITC must follow the rules and documentation requirements under GST law.
9️⃣ Important Points Buyers Should Know
Before purchasing gold jewellery, customers should keep the following points in mind:
✔ Always ask for a GST invoice
✔ Verify gold purity and hallmark certification
✔ Understand that GST applies to both gold value and making charges
✔ Check the breakup of gold price, making charges, and GST in the bill
✔ Compare making charges across different jewellers
🔟 Why Understanding GST on Gold Matters
Gold purchases often involve large amounts of money, especially during weddings and festivals. Understanding GST helps buyers:
- Avoid overcharging by jewellers
- Verify the correct tax rate
- Make informed purchasing decisions
Transparency in billing also ensures that customers know exactly what they are paying for.
Conclusion
Under GST, gold and gold jewellery attract a 3% tax, while making charges are taxed at 5%. When purchasing jewellery, buyers should carefully check the invoice breakup of gold value, making charges, and GST.
Understanding these GST rules helps consumers ensure fair pricing and proper billing when buying gold.
Businesses must also understand GST on rent for commercial properties.
Link to:
GST on Rent in India
