GST on Gold Purchases and Jewellery: Rates, Impact, and Calculations

 

Understanding GST on gold

 

As discussed above, GST on gold can differ in rate depending on the type of gold purchase. It is levied on import, purchase, and making charges of the gold.

The GST on gold is levied at 3% and this applies to both 22 and 24 carat physical gold. It applies to gold bars, gold jewellery, and even gold coins. So, pure gold in any form attracts 3% of GST. The same rate of 3% also applies to digital gold as well.

On the other hand, GST on Gold ETFs, gold mutual funds, and sovereign gold bonds may have different GST sets. Gold is not subject to GST but it may attract management fees, service charges, etc., that may involve 18% GST.

 

GST calculation on gold purchase and making

 

GST is applicable when an individual purchases new gold. Additionally, registered gold dealers also have to pay GST on gold.

The GST is applied in the following conditions:

• Purchase of new gold

  
  

  Purchase of new gold attracts 3% GST charges. It may also involve GST on making charges. Gold bar includes 3% GST. As discussed above, this taxation is applicable for both 22 and 24 carat gold purchase.
  

• Purchase of digital gold

  
  

  Digital gold attracts 3% GST. It includes all the expenses related to insurance premium, the storage cost, fees of trustee, etc., similar to that of physical gold purchase.
  

• GST on making charges

  
  

  Jewellers charge 3% gold making charge which is computed on the total price of the product.
  

• Exchange of old gold jewellery

  
  

  There is no GST applied on exchange of old gold for new gold jewellery. So, if you have old gold jewellery, you can get it exchanged without having to pay additional GST on it. However, if a registered dealer sells old gold jewellery, 3% GST is levied on it.
  

• GST on import of gold

  
  

  Import of gold in India attracts 3% GST. It also attracts custom duties. Thus, importing gold in India increases the final price of the gold. The Union Budget 2024 announced a reduction in the custom duty on gold import by 9%. This is the new rate:
  

GST on gold vs pre-GST tax on gold

 

The coming of GST definitely increased taxation, so the demand can be seen to be reduced. However, the taxation on gold was different in the pre-GST era. To understand the impact of GST on gold in the current scenario, here is a detailed comparison of the GST and pre-GST on gold:

The tax rates may vary in different states and UTs

From the table above, you can conclude that now the GST rates are slightly higher than the pre-GST rates. Initially, when the GST was introduced, the charges were quite high, which spiked the gold rates. However, the customs duty has now also been reduced, making the overall charges affordable.

Conclusion

 

GST, or Goods and Services Tax, was introduced in 2017.2 Since its Introduction, GST has transformed the Indian taxation system to a great extent. Gold, being one of the most valuable and most popular metals in the country, has also been subject to GST. Over the years, the charges have been reduced, as custom duty is now 6%, and gold value GST is 3%.

So, before you step out to purchase or sell gold as an individual or a registered company, it is crucial to stay updated on the GST rules.

FAQs

 

1. At what rate is GST charged on new gold jewelry purchases?

   
   

   GST on new gold purchases is levied at 3%. The charges remain at 3% whether or not the invoice mentions making charges separately.
   

2. What is GST on digital gold?

   
   

   Digital gold attracts 3% Good And Services Tax, just like physical gold.
   

3. Is GST applicable on an exchange of old gold with new gold ?

   
   

   No. The exchange of old gold is not subject to GST charges.