Understanding GST Rates on Gold in India: A Comprehensive Guide

Gold holds a special place in Indian culture, symbolizing wealth and prosperity. Understanding the Goods and Services Tax (GST) applicable to gold is essential for both buyers and sellers. This article simplifies the GST rates on various forms of gold, including jewellery, coins, and bars, making it accessible for everyone.

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    GST Rates

    GST on Gold: An Overview

    In India, the GST rate on gold is set at 3%. This rate is consistent across different forms of gold, such as jewellery, coins, and bars. Additionally, a 5% GST is levied on the making charges of gold jewellery.

    HSN Codes and Corresponding GST Rates for Gold

    The Harmonized System of Nomenclature (HSN) assigns specific codes to products for taxation purposes. Below is a table detailing the HSN codes for various gold products and their corresponding GST rates:

    HSN Code Description GST Rate
    71081100 Gold powder 3%
    71081200 Other unwrought forms of gold 3%
    71081300 Other semi-manufactured forms of gold 3%
    71082000 Monetary gold 3%
    71131910 Jewellery of gold, unstudded 3%
    71131920 Jewellery of gold set with pearls 3%
    71131930 Jewellery of gold set with diamonds 3%
    71131940 Jewellery of gold set with other precious and semi-precious stones 3%

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    GST on Making Charges

    When crafting gold jewellery, artisans add making charges, which are the costs associated with designing and manufacturing the piece. These charges attract a GST of 5%. For example, if the making charges for a gold necklace amount to ₹5,000, the GST on these charges would be ₹250 (5% of ₹5,000).

    Calculating GST on Gold Jewellery: A Step-by-Step Guide

    To understand how GST is applied to gold jewellery, consider the following example:

    • Price of gold (10 grams): ₹50,000
    • Making charges: ₹5,000
    • Total cost before GST: ₹55,000

    Now, let’s calculate the GST:

    1. GST on gold value: 3% of ₹50,000 = ₹1,500
    2. GST on making charges: 5% of ₹5,000 = ₹250
    3. Total GST: ₹1,500 + ₹250 = ₹1,750
    4. Final price: ₹55,000 + ₹1,750 = ₹56,750

    Therefore, the buyer would pay ₹56,750 in total for the gold jewellery.

    Also Know About: The Impact of GST on Gold and Gold Jewellery

    Impact of GST on Gold Prices

    The introduction of GST has streamlined the taxation process for gold, replacing multiple taxes like VAT and service tax. While the GST rate is slightly higher than the previous tax structure, it has brought uniformity and transparency to gold pricing across India.

    GST on Gold Imports and Exports

    • Imports: Importing gold into India attracts a Basic Customs Duty (BCD) of 5% and an Agriculture Infrastructure and Development Cess (AIDC) of 1%. Additionally, an IGST of 3% is levied on the assessable value, which includes the cost of gold plus customs duties.
    • Exports: Exports of gold are considered zero-rated under GST, meaning no tax is levied on exported gold. This policy aims to make Indian gold exports more competitive in the global market.

    Special Considerations

    • Digital Gold: Purchasing digital gold also attracts a GST of 3%, similar to physical gold.
    • Old Gold Exchange: When exchanging old gold jewellery for new, GST is not applicable to the value of the old gold. However, GST will be charged for the making of the new jewellery.

    Unique Features of BUSY Accounting Software For the Gold Industry

    • Set and update gold rates (22K, 24K, etc.) daily according to the market prices.
    • Automatically calculate prices based on item weight and purity.
    • Add detailed information for each jewellery item, including weight, design, stone type, carat, and making charges.
    • Manage both fixed and weight-based making charges easily.
    • Generate barcode labels for each jewellery item for faster billing and tracking.
    • Maintain separate stock records for gold, silver, and other precious metals.
    • Track inventory in dual units, such as grams and pieces.
    • Keep purity-wise stock records (e.g., 18K, 22K, 24K).

    Conclusion

    Understanding the GST rates and HSN codes associated with gold helps buyers make informed decisions and ensures compliance with tax regulations. Whether purchasing gold jewellery, coins, or bars, knowing the applicable taxes and charges ensures transparency and aids in financial planning.

    Frequently Asked Questions (FAQs)

    • Is GST applicable when exchanging old gold jewelry for new?
      No, GST is not applicable when you exchange old gold jewelry for new ones. Such transactions are considered as a supply of goods and are not subject to GST.
    • Can I claim Input Tax Credit (ITC) on gold purchases?
      If you are a registered dealer purchasing gold for business purposes, you can claim ITC on the GST paid. However, individuals buying gold for personal use cannot claim this credit.
    • Has there been any recent change in customs duty on gold imports?
      Yes, in the Union Budget 2025, the customs tariff on jewelry and parts thereof (HSN code 7113) was reduced from 25% to 20%, effective from February 2, 2025.
    • Are there different GST rates for different purities of gold?
      No, the GST rate remains the same at 3% for all purities of gold, including 18K, 22K, and 24K.
    • How does GST affect the overall price of gold jewelry?
      GST adds to the overall cost of gold jewelry. A 3% GST is applied to the gold value, and a 5% GST is applied to the making charges, increasing the final price paid by the consumers.
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