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GST on Gold & Gold Jewellery- Overview, Calculation, Impact & Exemption 2023
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Goods and Services Tax (GST) is applicable to almost all goods and services in India since 2017. It was a historic move from the Government of India to bring the various tax slabs in different states under one umbrella. Gold is one of the most sought-after metals; many eyebrows were raised when the government levied GST on Gold in two different categories! The topic is widely discussed even after 5 years of implementation. So let us understand this in detail through this article!
What is GST on Gold?
In 2017, when GST was implemented on most commodities in India, gold was no exception. GST of 3% on the value of imported gold and 5% on the making charge of gold jewellery was imposed. This move aimed to increase the transparency of the import and export of gold; however, it had some adverse effects. The vendors started moving into the unorganized sector to escape from the increasing gold price. Under the new GST norms, banks pay 3% additional indirect tax. This tax has increased from 10% to 13%. The increase has become a deterrent for several banks and may remarkably impact the demand for gold. Hence, banks are hesitant to import gold in their account.
How to Calculate GST on Gold and Gold Jewellery?
GST on Gold can be calculated in two different ways to understand depth. We shall calculate GST on Gold (raw) in the first method and look at the GST on gold jewellery in the second method.
Let us assume that gold is priced at Rs. 6,125 per gram today, and you want to purchase 25 grams of gold (raw). In such a case, the GST on gold would be as below:
| Tax | Pre GST | Post GST | |
| Gold price | 1,53,125 | 1,53,125 | |
| Customs duty | 10% | 15,312.5 | 15,312.5 |
| Service tax | 1% | 1,684.375 | NIL |
| GST | 3% | NIL | 5,053.12 |
| VAT | 1.2% | 2,041.46 | NIL |
| Total | 1,72,163.33 | 1,73,490.62 |
But the maths changes if you would like to buy a finished gold product, that is, gold jewellery. Let us calculate the GST on 25 grams of gold jewellery.
| Tax | Pre GST | Post GST | |
| Gold price | 1,53,125 | 1,53,125 | |
| Customs duty | 10% | 15,312.5 | 15,312.5 |
| Service tax | 1% | 1,684.375 | NIL |
| GST | 3% | NIL | 5,053.12 |
| VAT | 1.2% | 2,041.46 | NIL |
| Making charge | 10% of Gold price and customs | 16,843.75 | 16,843.75 |
| GST on making charge | 5% | NIL | 842.1875 |
| Total price | 1,89,007.08 | 1,91,176.55 |
Impact of GST on Gold
Before GST, the effective tax on the gold value was 2% (1% VAT and 1% service tax). With GST becoming 3%, the total price of gold has marginally increased. When one considers the GST on making charges (5%), the effective increase seen in the case above is approximately 2%. This increase is believed to be due to the country’s efforts to reduce gold imports, which help in further decreasing the nation’s current account deficit.
If we view the effect of GST on gold as a seller, then the sellers in the organised sectors are the only ones affected by this government move. Even today, gold is mainly traded in the unorganised sector. Moreover, this move might give a reason for more sellers to choose the unorganised way of trade to avoid tax payment.
Revised Tax Rates on Gold and Gold Jewellery Under GST
As seen in the above tables, the gold and gold jewellery taxes have been revised as per the GST norms since 2017. Though the difference is not much, one can notice a slight overall increase in the metal price by the time it reaches the end-user. However, the work of multiple organisations, such as the service taxes department and the VAT department, has now been combined into one department called the GST. The move is welcome from a bureaucratic level as processes can happen faster within a department. The taxes applicable while buying gold jewellery would thus be:
- 10.75% customs while importing gold from overseas (Customs duty 7.5% ; GST 3%)
- 3% on the value of the gold coin, gold bar, or any gold jewellery
- 5% on the making charges of gold jewellery
GST Rates as per Goods and Service Tax Council
| HSN Code | Description of Goods | CGST Rate (%) | SGST/ UTGST Rate (%) |
| 7108 | Gold (including gold plated with platinum) unwrought or in semimanufactured forms, or in powder form | 1.50% | 1.50% |
| 7109 | Base metals or silver, clad with gold, not further worked than semimanufactured | 1.50% | 1.50% |
| 7111 | Base metals, silver or gold, clad with platinum, not further worked than semimanufactured | 1.50% | 1.50% |
| 7112 | Waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal. | 1.50% | 1.50% |
| 7113 | Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal | 1.50% | 1.50% |
| 7114 | Articles of goldsmiths’ or silversmiths’ wares and parts thereof, of precious metal or of metal clad with precious metal | 1.50% | 1.50% |
| 7115 | Other articles of precious metal or of metal clad with precious metal | 1.50% | 1.50% |
| 7116 | Articles of natural or cultured pearls, precious or semiprecious stones (natural, synthetic or reconstructed) | 1.50% | 1.50% |
| 7117 | Imitation jewellery [other than bangles of lac/shellac] | 1.50% | 1.50% |
| 7118 | Coin | 1.50% | 1.50% |
| 7102 | Rough diamonds or simply sawn diamonds, industrial or nonindustrial | 0.13% | 0.13% |
| 7103 | Precious stones (other than diamonds) and semiprecious stones, whether or not worked or graded but not strung, mounted or set; ungraded precious stones (other than diamonds) and semiprecious stones, temporarily strung for convenience of transport | 0.13% | 0.13% |
| 7014 | Synthetic or reconstructed precious or semiprecious stones [other than diamonds], whether or not worked or graded but not strung, mounted or set; ungraded synthetic or reconstructed precious or semiprecious stones [other than diamonds], temporarily strung for convenience of transport; synthetic or reconstructed diamonds, unworked or simply sawn or roughly shaped | 0.13% | 0.13% |
| 7018 | Imitation pearls, imitation precious or semi-precious stones and similar glass smallwares, and articles thereof other than imitation jewellery; glass eyes other than prosthetic articles; statuettes and other ornaments of lampworked glass, other than imitaion jewelery; glass microsphers not exceeding 1 mm in diameter | 9% | 9.00% |
| 5605 00 10 | Real zari thread (gold), and silver thread, combined with textile thread | 2.50% | 2.50% |
| 7106 | Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured in semi-manufactured | 1.50% | 1.50% |
Last updated on 7th September, 2023
Revised GST Exemption on Gold
The 31st GST Council meeting happened on the 22nd of December 2018. The results of this meeting were expected to bring some relief to the gold-buying community of the nation. The ruling at the meeting decided to exempt GST on gold in case the supply was done by a notified agency to a GST-registered gold jewellery exporter. This has helped Indian gold exporters and made Indian gold exports more competitive globally. However, this decision of the council meeting did not affect the domestic gold buyers of the country.
GST Impact on Gold Jewellery-Making Charges
India has two types of gold jewellery makers. Those who produce for the domestic market and those who export the gold jewellery made in India. The GST is currently being levied only on the gold jewellery being sold within the county. This means that Indian gold jewellery exports still have a breather for their businesses. The GST on making a charge for gold jewellery would remain at 5% for the remaining people who would like to buy gold jewellery.
Notably, the effective increase in the overall price of gold jewellery would only be approximately 2% as seen in the above table. This is a move that the experts believe will strengthen the organised gold trading sector in the country. According to various websites, of the 700-800 tonnes of gold that enters the country, close to about 30 tonnes is brought in illegally. The introduction of GST is believed to make the process more transparent and reduce the illegal import of gold.
Comparison of Gold Prices Before and After GST was implemented
The above discussion would have given you an idea about the gold prices before and after GST. The below table aims to install more clarity about the same:
| Product | Pre-GST | Post-GST |
| GST rate on gold value | NIL | 3% |
| Sales tax on gold value | 1% | NIL |
| VAT on gold value | 1% | NIL |
| Import duty on gold | 10% | 10% |
| Gold making charges | NIL | 5% |
Key Factors to Consider Before Buying Gold
Gold is one of the most preferred forms of investment in India. It is also one of the most promising returns-yielding investment options. Thus, numerous people tend to buy gold. Gold may be purchased in two forms, majorly:
- Pure gold biscuits – 24-carat
- Gold ornaments – usually 22 carats
Since it is an important form of investment for many in India, let us understand various factors that we need to consider while buying gold.
- Purity:
The purity of gold is determined and assessed by hallmarking in India. The agency responsible for the same is the Bureau of India Standards (BIS). The hallmark on gold would be a combination of a number followed by a letter. This would be stamped next to the BIS symbol. There are majorly four types of gold:
- 100% pure with a symbol 24 K:
This is usually bought as an investment. Making jewellery with 24 K gold is not preferred, as gold in its purest form does not have much strength.
- 92% pure with a symbol 22 K:
This is the most popular form of gold used in jewellery making in India today. It includes 8% of other metals like silver, zinc, nickel etc. to make the ornament stronger.
- 75% pure with a symbol 18 K:
If you are looking for ornaments with diamond, then 18 K gold would be a better option as the rest of the 25% of the metals make the jewel stronger and help form a perfect hold for the diamond.
- 58% pure with a symbol 14 K:
These can be preferred for gold ornaments that you would use every day like finger rings, nose rings and earrings. If the jewel would be subjected to hard weather conditions regularly, this would be a better option.
- Price:
The price of gold varies daily. Hence, ensure you know the gold rate beforehand! The price also depends on the type of gold (24 K/22 K/18 K/14 K). Hence, decide the type of gold you would like to buy in advance so that you can plan better.
- GST rate on gold:
Ensure that the GST rates are separately mentioned in your invoice when you buy the gold jewellery. Be aware that the GST on gold value is 3% and that on making charges is 5%. The vendor has to mention these separately.
- Stones and gold:
If you buy a jewel with stones embedded with gold, ensure that the GST rates for the stones and gold are mentioned separately. The GST slabs tend to be different for stones and gold.
Frequently Asked Questions (FAQs)
What is the GST on gold in India?
In India, GST is applied to gold in two ways, i.e. on purchase of gold and for gold jewellery. Currently, GST is 3% for the value of gold and 5% on the making charges of gold jewellery.
How is the GST calculated on gold in India?
When gold is imported, 10% of the gold value would be levied as customs duty. There would also be a 3% GST on the gold value. Once the gold is used to make jewellery another 5% GST would be charged on the making charges for the jewellery. So the final price of the jewellery would be as below:
Price of gold jewellery = Value of gold + Custom duty + GST on gold value + making charges + GST on making charges
Is gold tax-free?
No. If you purchase gold, you will be paying a GST of 3% for pure gold and 5% on making charges for gold jewellery. If you have invested in gold coins or jewellery and selling those items, you would have to pay income tax. For short term gains, you would have to pay tax as per your tax slab. For long term gains, you would have to pay 20% tax and surcharges if any.
How do I make sure that I buy pure gold?
In India, the purity of gold is assured by hallmarking by BIS. You can always ensure that the gold you buy has a hallmark on it. The hallmarks would be one of the four mentioned below:
- BIS 24K
- BIS 22K
- BIS 18K
- BIS 14K
Can I buy gold without paying GST in India?
The Indian gold market combines both the organised and the unorganised sectors. However, the purity of gold in most cases can only be determined in the organised sector. Thus, it is advised to buy gold only with a proper invoice.
How much gold is tax free in India?
Gold is not a tax-free commodity. Purchase of gold coin, gold bar will have 3% of GST whereas making charges will have 5% levied on it. For storing gold and jewellery at home, married women can store 500gms, unmarried women can store 250 gms, and men can store 100 gms of gold and gold jewellery.
Can I buy Gold without GST?
No, there will be Goods and Service Tax levied on the purchase of gold or gold jewellery.
Who pays GST on Gold?
The individuals who purchase gold or gold jewllery has to pay the GST levied on it. Making charges for jewellery will be levied extra for jewellery.
What is the GST on 22K gold and 24K gold?
The GST is 3% on both 22K and 24K gold.
Author
Priyanka Rao
Priyanka Rao is a content strategist for Jupiter.Money, and specializes in writing on topics related to finance, banking, budgeting, salary & wages, and other financial matters. She has a passion for creating engaging content that resonates with audiences across various digital platforms. In her free time, Priyanka enjoys traveling and reading, which allows her to gain new perspectives and inspiration for her work. With a keen eye for detail and a creative mindset, Priyanka is committed to creating content that connects well with her readers, enhancing their digital experiences.
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