Introduction
Gold has held an unparalleled place in Indian culture for centuries—both as an ornament of adornment and a tool of investment. From weddings and festivals to savings strategies and inheritance, gold is interwoven into the fabric of Indian life. The implementation of the Goods and Services Tax (GST) in July 2017 significantly altered the pricing dynamics of gold in India.
Whether you’re buying 18K designer jewellery, 22K traditional ornaments, or 24K investment-grade gold, understanding the impact of GST on gold is crucial. This comprehensive article explains everything you need to know—from the current GST rates on different types of gold jewellery, components of pricing, to how GST has impacted the overall gold market, especially in relation to 18, 22, and 24-carat jewellery.
1. Basics of GST on Gold in India
What is GST on Gold?
GST, or Goods and Services Tax, is a unified indirect tax regime that replaced multiple central and state taxes. For gold, GST replaced VAT (Value Added Tax), Excise Duty, and other levies, providing transparency in pricing.
Current GST Rates Applicable on Gold
| Component | GST Rate |
| Pure Gold (bullion or bars) | 3% |
| Gold Jewellery | 3% on gold + 5% on making charges |
| Making Charges (if billed separately) | 5% |
| IGST (on imports) | 10% customs duty + 3% IGST |
The GST rate of 3% is charged on the value of gold, and 5% GST is levied on the making charges (labour and design charges).
2. Understanding Gold Carats: 18K, 22K, 24K
24K Gold
- Purity: 99.9%
- Use: Investment (coins, bars)
- GST Rate: 3%
22K Gold
- Purity: 91.6%
- Use: Jewellery (durable, suitable for wear)
- GST Rate: 3% on gold + 5% on making charges
18K Gold
- Purity: 75%
- Use: Studded jewellery, designer ornaments
- GST Rate: 3% on gold + 5% on making charges
3. Detailed Cost Structure of Gold with GST
To understand how GST influences final pricing, let’s break it down:
Example: Buying 10 grams of 22K Gold
- Gold Price: ₹5,500/gram → ₹55,000 (10 grams)
- Making Charges: ₹500/gram → ₹5,000
- GST on Gold (3% of ₹55,000): ₹1,650
- GST on Making Charges (5% of ₹5,000): ₹250
Total Cost = ₹55,000 + ₹5,000 + ₹1,650 + ₹250 = ₹61,900
This structure applies similarly to 18K and 24K gold, though the base value of the gold changes due to purity.
4. GST on 24K Gold (Coins, Bars)
24K gold is the purest form and primarily used for investment rather than making ornaments.
GST Calculation on 24K Gold
- Gold Value (10g): ₹6,000/gram → ₹60,000
- GST (3%): ₹1,800
Total Price = ₹61,800
Note: No making charges are involved in standard gold coins and bars, hence only the 3% GST is applicable.
5. GST on 22K Gold Jewellery
This is the most common form used in India for necklaces, bangles, rings, etc.
Cost Breakdown
| Particulars | Amount (INR) |
| Gold Value (10g) @ ₹5,500/g | ₹55,000 |
| Making Charges (₹500/g) | ₹5,000 |
| GST on Gold (3%) | ₹1,650 |
| GST on Making Charges (5%) | ₹250 |
| Total | ₹61,900 |
6. GST on 18K Gold Jewellery
Typically used in designer and studded ornaments. Slightly cheaper due to lower gold content.
| Particulars | Amount (INR) |
| Gold Value (10g @ ₹4,500/g) | ₹45,000 |
| Making Charges | ₹6,000 |
| GST on Gold (3%) | ₹1,350 |
| GST on Making Charges (5%) | ₹300 |
| Total | ₹52,650 |
7. GST on Imported Gold
When importing gold:
- Customs Duty: 10%
- Agricultural Infrastructure Cess: 2.5%
- GST (IGST): 3%
Total effective tax on imports: ~15.5%
This makes imported gold more expensive, which affects domestic prices too.
8. Impact of GST on Gold Sector
Before GST
- Excise Duty: 1%
- VAT: 1% (varies by state)
- Making charges: Non-taxable or service tax @15% (rarely levied)
Total Tax: 2% to 3%
After GST
- Gold: 3%
- Making Charges: 5%
Effective total tax: ~3.6% to 4%
Resulting Impact:
- Slight increase in final prices
- Better billing transparency
- Improved compliance in the gold industry
- Reduction in unorganized sector transactions
9. HSN Codes for Gold under GST
| Item | HSN Code |
| Gold (unwrought or semi-manufactured) | 7108 |
| Gold jewellery | 7113 |
| Articles of goldsmiths and silversmiths | 7114 |
These codes help in GST classification and compliance.
10. GST Compliance for Jewellers
Jewellers must:
- Register under GST
- Charge 3% GST on gold and 5% on making charges
- Maintain proper invoice records
- File regular GST returns (GSTR-1, GSTR-3B)
- Use HSN codes correctly
11. Benefits to Consumers
- Standardized tax rates across India
- Transparent billing
- Easier comparison across brands
- Clear segregation of gold value and service charges
12. Exemptions & Special Scenarios
A. Old Gold Jewellery Exchange
If you’re exchanging old jewellery for new:
- No GST on the value of old gold if adjusted in the invoice
- GST applies only to the net payable amount
B. Handicraft Jewellery
Some states or artisan jewellery (under government schemes) may be eligible for concessional treatment or relief.
13. GST and Investment in Gold
Investment Forms:
- Physical gold (coins, bars)
- Digital gold
- Gold ETFs
- Sovereign Gold Bonds (SGB)
Tax Treatment:
Investment Type GST Applicable?
| Investment Type | GST Applicable? |
| Physical Gold | Yes (3%) |
| Digital Gold | Yes (3%) |
| Gold ETFs | No GST on purchase, but STT applies |
| SGBs | No GST; Exempt from capital gains after 5 years |
SGBs are an excellent way to invest in gold without incurring GST.
14. Challenges and Criticism
- 5% GST on making charges viewed as high by traditional jewellers
- Complexity in distinguishing between gold value and service value
- Compliance costs for small retailers
- Rise in cash transactions to avoid GST
15. Future Outlook
- Government may consider reducing GST on making charges
- Possible introduction of e-invoicing for jewellery retailers
- Increased digitalization in the sector
- Better traceability of gold supply chain
16. Tips for Buyers
- Always ask for a GST invoice
- Verify BIS hallmark for purity
- Compare making charges and GST breakdown before purchase
- Understand the difference between 18K, 22K, and 24K pricing
17. Key Takeaways
- GST on gold is 3%, regardless of carat
- Making charges attract 5% GST
- Final cost of gold varies by purity, design, and labour
- 24K gold is for investment; 22K for jewellery; 18K for designer pieces
- Buying from reputed jewellers ensures GST compliance and transparency
Conclusion
Understanding GST on gold, especially for 18K, 22K, and 24K ornaments, helps you make informed purchasing decisions. With rising gold prices and taxation playing a crucial role, clarity on tax components is essential not just for compliance, but also to avoid overpaying.
As the Indian gold market continues to evolve with digitization and transparency, awareness around GST will empower both buyers and sellers in fostering trust and accountability in the gold ecosystem.
