• 21 Feb , 2023
• Blog

What Is The Rate Of GST On Gold In India?

Buying Gold in today’s digital world is as easy as ordering food from your favourite restaurants, thanks to DigiGold.

In fact, following Finance Minister Nirmala Sitharaman's announcement of a reduction in gold customs duty during Budget 2024, customers have rushed to take advantage of lower gold prices. This has led to a notable increase in demand for gold - According to India Today. 

But what about keeping up with changes in regulations like Taxes like GST? 

Without further due, let’s look at what we’re going to cover in this blog.

1) What is GST on gold jewellery & coins?

You have to pay 3% GST (1.5% CGST & 1.5% IGST) on gold and 5% on gold making charges.

And let us make it clear, this 5% rate is charged on making charges which differ from jeweller to jeweller. 

As this making charge varies the amount you get at the end varies drastically. 

GST has affected the prices of gold jewellery on a large scale. We have explained it in detail further in the blog. 

How GST Is Calculated On Gold Jewellery?

We have shown this calculation considering that it comes under composite supply.

For example, if you purchase a gold bracelet that includes both the value of the gold and the making charges (labour charges) for designing and manufacturing the bracelet, the supply of the gold bracelet is a composite supply. 

Impact of GST rate on gold ornaments

Before GST was introduced, You had to pay 1% Service Tax & 1% VAT resulting in a total of 2% Tax on marking charges & gold combined. 

Now after the implementation of GST, you have to pay 5% GST on making charges & 3% on gold. So the final price of jewellery has increased after GST came into effect. 

But here’s the good news, according to a recent update after budget 2024, the overall customs duty on gold has been reduced from 15% to 6% & basic custom duty 5% from a staggering 10% previously.  

Didn’t get this good news? Here’s the simple explanation - Making these adjustments you can benefit from overall reduction in taxes & cess from 15% to 6% including GST. Additionally, the indirect benefit from the saved taxes paid by middlemen which would have been included in your purchase.

Even in simpler terms, Tax is reduced on Gold directly & you would also benefit indirectly! You can see in the below table where custom duty was 15% due to which there’s a huge savings.

GST in Gold of Composite Supply (Example - Jewellery)

Just note, that here we’ve considered a composite (such as jewellery) supply which means gold mixed with some substance like metal which might be again taken into account additional for GST and will not be considered at the time of selling, making pure form of gold more attractive as an investment or savings option.

Here’s a blog we recommend you to read to understand more on taxes on gold for in-depth.

2) Is your purpose for buying gold jewellery clear?

A lot of people think that they are buying gold jewellery for investment purposes. First of all, you need to get rid of this mindset. 

You ask 10 people about their purpose for buying gold ornaments, and 6 or 7 will say they did it as a means to secure the future of their loved ones. 

Now why is it incorrect? Because here "GST" comes into play as you need to pay high GST on the purchase of gold ornaments.

If we dive deep into the concept of the GST rate on gold jewellery, we will understand why it’s not as valuable as we think it is. 

GST on gold purchase and GST on gold-making charges

We agree jewellery is definitely worth your mom's precious smile. Because let’s be honest emotions are priceless. 

But is it even worth it to buy jewellery by paying such a high rate of GST?

It may be a worthwhile gift if we just think about the precious smile of our moms. But It’s not at all a worthwhile gift for yourself or your wife/ sibling or some young person.

Hear us out. It would be definitely worth it if you could avoid GST on making charges. But unfortunately, you cannot.

Don’t worry we have a hack!

You can easily avoid 5% GST on making charges by… gifting them the same amount of digital gold.

Now you know the smart way of gifting gold.

Go win their hearts, and reserve their future while also saving GST on making charges. We have a whole dedicated blog on how Digital Gold can be a unique & valuable gift for everyone on your list.

Read it to get a more clear picture.

You must be wondering about the goods and service tax on digital gold now.

Keep reading & you will know that also. 

Rate of GST on Digital Gold 

The GST rate for digital gold is the same as physical gold i.e GST on gold is charged at the rate of 3%.

We are not even kidding, You heard that right. 

Next time your relatives ask about the reason for gifting DigiGold, amaze them with these numbers.

3) Impact Of GST On Gold Rate In India

With the introduction of GST in 2017, there was a sudden rise in the prices of gold.

Gold price after GST through a table presentation

• Rates of gold before GST 

GST came into implementation in 2017. Observe the difference in the rates post-implementation. 

• Rates of gold after GST

Price fluctuations usually occur when something uncertain happens because gold is considered a safe-haven asset by many investors. 

One more point to note here is that increasing rates is a good thing for you smart savers out there. Because the value of your gold also increases with time. 

Let’s round it up by clearing up a few questions for you.

FAQs – GST on Gold

What is GST On gold 2022?
3% GST is applicable on gold as of 2022.

What is the rate of GST on gold coins & making charges & HSN code?
Gold Coin comes under HSN Code 7118 and attracts a 3% GST rate.

What is making charge on gold jewellery under GST?
A 5% making charge is levied on gold jewellery under GST

Do gold rates include GST?
No, it doesn't. gold rates only indicate the price of gold in given purity. Making charges and 
GST is then added afterwards to obtain the final price of gold.

How can I save GST on Gold?
If you sell old gold jewellery and buy new gold jewellery in the same transaction, you will not be charged GST. This means you can save on GST tax by simply exchanging old gold for new gold.

And if you want to buy gold coins without GST on making charges, buy DigiGold. 

It’s very convenient & you get 24k pure gold with safety assurance.