GST on Jewellery – Rates, Making Charges & Key Rules

Dev buys a gold necklace for his mother’s birthday worth ₹10,00,000. Here’s how GST is calculated:

(When you buy jewellery in India, you pay GST (Goods and Services Tax). The GST rate on jewellery is 3% (2% for gold + 1% for making charges).
 

Key Points:
 

• GST is added to the jewellery price.
   
• For gold, GST is 2% on the gold value + 1% on making charges.
   
• Always ask for a bill showing GST separately.

Dev covers all the costs, which are ₹10,30,000 including GST. The money from this tax is transferred to the government.

GST on Jewellery – Different Categories with Prices and GST Rates

When buying jewellery in India, GST (Goods and Services Tax) is applied based on the type of jewellery and its value. 

Example:
 

Dev wants to buy jewellery for his mother’s birthday. He checks different options, and the GST varies depending on what he buys.
 

Key Points:
 

• Gold, Silver, Diamond, and Platinum Jewellery have 3% GST (2% on metal + 1% on making charges).
   
• Imitation Jewellery (artificial/fashion jewellery) has a 5% GST.
   
• The total bill includes the jewellery price + GST.
   
• Always ask for a detailed bill showing GST separately.

Dev decides to buy gold jewellery for ₹10,00,000. After adding 3% GST (₹30,000), he pays ₹10,30,000. If he had chosen imitation jewellery, the GST would have been 5%.

Read More – GST on Gold – Current Tax Rates & Price Breakdown

HSN Codes for Jewellery – Types and Their Codes

Harmonised System of Nomenclature (HSN) codes are required for GST when working with jewellery in India during business. Such codes allow the tax office to know which jewellery category a piece belongs to.

Example:

Dev is planning to buy jewellery for his mother and wants a valid invoice to hand her. The jeweller lists the HSN code in the bill for your purchase.

Key Points:
 

• HSN codes are used in GST invoices for proper tax classification.
   
• Gold, silver, platinum, and diamond jewellery fall under HSN 7113 (if set) or 7102 (if loose diamonds).
   
• Imitation jewellery has a different HSN code (71179010) and a higher GST rate (3%).
   
• Loose gems (unset) like pearls or rubies use 7113.

When Dev buys a gold necklace (HSN 7113), the jeweller includes this code in the bill with 3% GST. If he buys fake jewellery (HSN 71179010), GST is 5%.

This table helps us understand which HSN code applies to different jewellery types for correct billing.

Types of Jewellery and Their GST Rates

Indian jewellery attracts different GST rates, depending on its type. Here are the details that make it clear how tax is calculated on various assets.

Example:

This month is Dev’s mother’s birthday, and he wants to buy jewellery as a gift. Depending on what he selects, the GST will be different.
 

Key Points:
 

• Real jewellery (gold, silver, platinum, diamonds) has a 3% GST.
  • For gold, 2% is on the gold value + 1% on making charges.
     
• Imitation jewellery (artificial/fashion) has a higher tax of 5%.
   
• Loose gems (not set in jewellery) also have a 3% GST
   
• Always check your bill - it should show GST separately.

When Dev buys a gold chain for ₹50,000, he pays:
 

• ₹49,000 for jewellery + ₹1,000 GST (2% on gold) + ₹500 GST (1% making) = ₹50,500 total

If he chooses imitation jewellery for ₹5,000, he pays ₹5,000 + ₹250 GST = ₹5,250 total.

This table helps understand GST rates for different jewellery types before purchasing.

Impact of GST on the Jewellery Industry

The jewellery business in India is now operating differently because of GST. Look at this simple way of explaining how it impacts buyers, sellers and the industry with Dev’s example.

Example:

Dev buys a gold ring for ₹30,000. Before GST, he paid:
 

• 1% VAT (₹300) + 1% excise duty (₹300) = ₹600 extra
   
• Now, under GST, he pays:
   
• 3% GST (₹900) = ₹30,900 total

Key Impacts:
 

• Simpler Taxes: Earlier, multiple taxes (VAT, excise) made jewellery costly. Now, just 3% GST for most jewellery.
   
• More Transparency: GST bills show tax separately, reducing black money risks. Dev gets a clear bill showing ₹900 GST.
   
• Organised Sector Growth: Small jewellers now follow proper billing, making business more professional.
   
• Higher Cost for Fake Jewellery: Imitation jewellery GST increased from 1-2% to 5%, making it slightly costlier.
   
• Working Capital Issues: Jewellers pay GST upfront when buying gold, which can strain small shops.
   
• Export Benefits: GST refunds help jewellery exporters compete globally.

For Buyers Like Dev:
 

• Pays slightly more tax (3% vs earlier 2%) but gets proper bills.
   
• No hidden charges – the price is clearer.
   
• Fake jewellery costs more due to 5% GST.

For Jewellers:
 

• Must file GST returns regularly.
   
• Need proper accounting systems.
   
• Benefit from input tax credit on raw materials.

To sum up, GST meant that buying jewellery became easier to understand, but sellers had to meet strict obligations. Dev wants to pay a fair amount and knows that his bills are always correct.

Also Read  - How to Calculate Gold Rate: All You Need to Know

Input Tax Credit (ITC) on Jewellery

Input Tax Credit (ITC) helps jewellers reduce their GST liability by claiming credit for taxes already paid on raw materials.

Example:
 

• Dev's jeweller buys gold for ₹1,00,000 and pays ₹3,000 GST (3%).
   
• He makes a necklace and sells it to Dev for ₹1,50,000, charging ₹4,500 GST.
   
• The jeweller can claim an ITC of ₹3,000 (paid on gold).
   
• His net GST payable becomes ₹4,500 - ₹3,000 = ₹1,500.

Key Points:
 

• ITC prevents double taxation.
   
• Only registered businesses can claim ITC.
   
• Proper invoices are required.
   
• The final customer (like Dev) bears the net GST.

Through this system, selling jewellery remains fair and follows tax guidelines.

Conclusion

The buyers and sellers of jewellery are concerned with the GST on jewellery. In case you purchase gold, diamond or any other jewellery a 3% GST is charged on gold and 5% of making charges but in case of precious stones different rates may be imposed. 

On the part of sellers, they will have to register in case there is a high turnover and they are required to file periodic returns. Anyone intending to purchase anything on behalf of the business must demand appropriate bills in order to take input tax credit. 

Although jewellery may become a bit more expensive with GST, the scheme introduces transparency in the jewellery trade. It is best to regularly review the current rates and regulations, and an expert in taxation should be consulted in cases of doubt in order to remove ambiguity and the risk of fines.

FAQs

1. What is the GST rate on gold jewellery?

The GST rate on gold jewellery is 3% (2% on the gold value + 1% on making charges). For example, if you buy a gold chain worth ₹50,000, you pay ₹1,000 (2%) on gold + ₹500 (1%) on making, totalling ₹1,500 GST.

2. Is GST applicable to silver jewellery?

Yes, silver jewellery attracts 3% GST, just like gold. If you buy silver anklets for ₹10,000, you pay ₹300 as GST.

3. Do I pay GST on making charges?

Yes, making charges have 1% GST. For instance, if making charges are ₹5,000 on a ring, you pay ₹50 as GST on just the making cost.

4. What is the GST on diamond jewellery?

Diamond jewellery (set in gold/silver) has 3% GST. Loose diamonds also have 3% GST if sold separately.

5. Is imitation jewellery taxed under GST?

Yes, imitation/fashion jewellery has a higher 5% GST rate. A ₹1,000 artificial necklace will cost ₹1,050 including GST.

6. Can I get a GST refund on exported jewellery?

Yes, exporters can claim a full GST refund on jewellery sold outside India, making exports more competitive.

7. Do small jewellers need GST registration?

Jewellers with sales above ₹40,00,000/year (₹20 lakh in some states) must register. Small artisans below this limit don’t need GST.

8. Can I claim the Input Tax Credit (ITC) as a jeweller?

Yes, registered jewellers can claim ITC on GST paid for gold, diamonds, and other materials used to make jewellery.

9. Why is there a 1% TCS on jewellery purchases above ₹2 lakh?

The government deducts 1% TCS (Tax Collected at Source) on big purchases (above ₹2 lakh) to track high-value transactions.

10. Is GST charged on old gold exchanged for new jewellery?

GST applies only to the extra amount paid. If you exchange old gold worth ₹30,000 for a ₹40,000 ring, GST is calculated at ₹10,000 (₹300 GST).

Apply for Loans Fast and Hassle-Free

Apply Now

About the Author

LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?