Suman Singh set out to buy gold jewellery for her daughter’s wedding. At a reputed Delhi jeweller, she picked a stunning 22-carat gold necklace.

Here’s how her ₹1,00,000 gold purchase broke down:

Gold Price: ₹1,00,000
Making Charges (10%): ₹10,000
GST on Gold @3%: ₹3,000
GST on Making Charges @5%: ₹500
Total GST Paid: ₹3,500
Final Invoice Amount: ₹1,13,500

The jeweller explained that under GST rules:

3% GST is levied on the value of gold.
5% GST is applied to making charges (which vary, usually 8–12%).

Suman paid ₹13,500 in taxes and made charges over the base price, but she walked away confident, knowing exactly where every rupee went.

GST on Gold – A Short Introduction

In India, the Goods and Services Tax (GST) on gold is structured as follows:

3% GST on Gold: This applies to the value of gold, including gold coins and bars.
5% GST on Making Charges: This applies to the charges for crafting gold jewellery, such as necklaces and rings.

For example, if you purchase 10 grams of gold valued at ₹50,000 and the making charges are ₹5,000, the GST would be:

GST on Gold: ₹50,000 × 3% = ₹1,500
GST on Making Charges: ₹5,000 × 5% = ₹250
Total GST: ₹1,500 + ₹250 = ₹1,750

Therefore, the total GST payable would be ₹1,750.

It's important to note that GST applies to both domestic purchases and imports. For imported gold, customs duties may also apply.

This GST structure aims to standardise taxation across the country, replacing previous taxes like VAT and service tax, and ensuring transparency in the gold trade.

GST on Gold – Create a Table Mentioning Different Categories of Gold with Price and Applicable GST Rate

Category	HSN Code	GST Rate	Applicable To
Gold (Physical)	7108	3%	24-carat, 22-carat, 18-carat gold in bars, coins, or as raw metal
Gold Jewellery	7113	3%	Finished gold jewellery, including necklaces, bangles, and rings
Gold Jewellery Making Charges	N/A	5%	Labour and craftsmanship charges for creating jewellery
Imported Gold	N/A	3% IGST	Gold imported into India (in addition to 12.5% customs duty)7
Gold Coins and Bars	7108	3%	Gold coins and bars, irrespective of purity

Example:

Gold Purchase ₹100,000
GST on Gold: ₹100,000 × 3% = ₹3,000
Making Charges: ₹10,000
GST on Making Charges: ₹10,000 × 5% = ₹500
Total GST Payable: ₹3,000 (on gold) + ₹500 (on making charges) = ₹3,500
Final Invoice Amount: ₹100,000 (gold) + ₹10,000 (making charges) + ₹3,500 (GST) = ₹113,500

Read More - GST on Jewellery

HSN Codes for Gold – Create a Table Mentioning Gold Types with Their Respective HSN Codes

HSN Code	Product Description	GST Rate
7108	Gold (including gold bars and ingots)	3%
7113	Articles of jewellery and parts thereof (including gold jewellery)	3%
7114	Other articles of gold (excluding jewellery and parts)	3%

Types of Gold and Their GST Applicability – Create a Table Mentioning Types of Gold and Their Applicable Tax Rates

Type of Gold	Purity	Form	GST Rate	Additional Notes
24K Gold	99.9%	Coins, bars, bullion	3%	Not used in jewellery; investment-grade gold
22K Gold	~91.6%	Jewellery	3% + 5% on making charges	Most common in Indian jewellery
18K Gold	75%	Designer/jewellery items	3% + 5% on making charges	More durable, used in fashion jewellery
Gold Coins	99.9% or 24K	Minted for investment	3%	No GST exemption
Gold Bars/Ingots	99.5% – 99.9%	Bullion	3%	Used by traders, investors
Gold Jewellery (any K)	Varies	Necklaces, rings, bangles, etc.	3% + 5% on making charges	Making charges GST applies separately

Impact of GST on the Gold Industry with Examples

Aspect	Pre-GST Regime	Post-GST (2017 Onward)	Example
Tax Structure	VAT (1%), Excise Duty (1%), Entry Tax (varies by state)	Uniform 3% GST on gold + 5% GST on making charges	A gold chain worth ₹1,00,000 had ~2% tax earlier; now incurs ₹3,500 GST (₹3,000 + ₹500)
Transparency	Low, due to state-level variations and unrecorded sales	High, with digital invoicing and centralised tax filing	Jewellers now issue GST-compliant bills with clear breakdowns of gold value and making charges
Compliance	Fragmented compliance; mostly cash transactions	Mandatory digital records, GST returns, and audits	A small jeweller must now maintain digital books and file GSTR-1, and GSTR-3B monthly
Input Tax Credit (ITC)	Not available for excise or VAT	Available for GST paid on business inputs	A jeweller buying gold for ₹10 lahks can claim ₹30,000 as ITC, lowering net tax outgo
Cost to Consumers	The slightly lower final price is due to minimal documented tax	Slight increase due to the uniform 3%+5% tax	A bangle costing ₹1,00,000 now totals ₹1,13,500 with tax (including 10% making charges)
Impact on Imports	Import duty + state taxes	12.5% Customs Duty + 3% IGST	Importing gold worth ₹10 lakh now attracts ₹1.25L duty + ₹30,000 IGST
Effect on Small Jewellers	Operated largely outside the formal economy	Increased compliance burden	Small shops may struggle with tech adoption and frequent GST filings
Consumer Behaviour	Preference for cash deals and unbilled purchases	Shift toward exchange offers and billing	More customers now exchange old jewellery to save tax and reduce cash spending

Input Tax Credit (ITC) on Gold

Also Read – How to Invest in Gold

Aspect	Details	Example
Eligibility	Registered gold businesses (manufacturers, traders, jewellers)	A goldsmith registered under GST buying gold bullion can claim ITC
Applicable GST Rates	3% on gold; 5% on job work/making charges	Buying gold worth ₹5,00,000 incurs ₹15,000 GST (eligible for ITC)
ITC on Raw Gold (Bullion)	Allowed if purchased from a registered dealer and used for business	GST of ₹15,000 on gold purchase can be claimed as ITC
ITC on Job Work Services	5% GST paid on outsourced services like melting, polishing, etc. is eligible for ITC	Job work worth ₹10,000 + ₹500 GST → ₹500 can be claimed
ITC under Reverse Charge (RCM)	If services received from unregistered dealers, GST paid under RCM is claimable as ITC	Goldsmith pays 5% under RCM for polishing work → can claim that amount as ITC
Reversal under Rule 44A	For pre-GST stock (as of 1 July 2017), 5/6th of ITC is to be reversed at the time of sale	ITC claimed on gold dore bar in stock → reverse 5/6th at time of outward supply
Ineligible ITC (Blocked Credit)	Gifts, personal consumption, or goods lost/stolen	ITC is not allowed on gold coins given as incentives or on damaged goods
Conditions for Claiming ITC	Proper documentation, timely return filing, supplier's GST compliance (GSTR-1 matching)	ITC is only valid if the supplier has uploaded an invoice in GSTR-1 and it is reflected in GSTR-2B
Documentation Required	Tax invoice, debit/credit note, bill of entry (for imports), ISD invoice if applicable	A jeweller must keep all purchase bills and GST returns as proof

Conclusion

In India, gold is subject to a 3% Goods and Services Tax (GST) on its value and an additional 5% GST on the costs of producing jewellery. All forms of gold, including jewellery, bars, coins, and digital gold, are subject to this tax. Although the GST replaced the former VAT and service tax system to provide uniformity and transparency, it has slightly increased the total cost to the customer.

FAQs Related to GST on Gold

1. What is the GST rate applicable to gold purchases in India?

A 3% GST is levied on the value of gold (whether coins, bars, or jewellery), and an additional 5% GST is charged on making charges for gold jewellery.

2. Is an Input Tax Credit (ITC) available on the purchase of gold?

Yes, registered dealers can claim ITC on gold purchases if the gold is used in the course of business (e.g., for manufacturing jewellery). However, ITC is not available to end consumers.

3. Is GST applicable on exchanging old gold for new jewellery?

Yes, GST is applicable only on the value of new jewellery minus the value of old gold exchanged. No GST is charged on the value of the old gold itself.

4. Are gold coins and bullion taxed differently from jewellery under GST?

No, both gold coins, bullion, and jewellery attract the same GST rate of 3%. However, only jewellery involves an additional 5% GST on making charges.