Gst Rate On Gold

GST (Goods and Services Tax) has standardised gold taxation in India. While it has made pricing more transparent, if you don’t understand how it works, you could be overpaying without realising it.

When you buy gold, you pay two types of GST:

• 3% GST on the gold itself: Whether it’s coins, bars, or jewellery, this applies to the actual value of gold.

• 5% GST on making charges: This applies only to the labour cost of crafting jewellery and replaces the earlier 8% tax rate.

 

Let’s break it down with an example. Suppose you buy gold worth ₹1,00,000. Here’s what you’ll pay:

• 3% GST on gold value = ₹3,000

• Making charges (average 12%) = ₹12,000

• 5% GST on making charges = ₹600

 

Total GST paid: ₹3,600.

Why GST on Gold Matters

Before GST, gold was taxed differently across states. The old system included:

• 1% VAT (varied between 1% to 1.5%)

• 1% service tax (applied to making charges)

 

This made pricing confusing, as different states had different tax rates. GST has simplified things by applying a single rate across India.

But GST isn’t the only tax affecting gold prices. Import duties also play a big role. Until 2024, import duty on gold was 15%. It has now been reduced to 6%, and there is speculation it may drop further to 3% in Budget 2025. A lower import duty means cheaper gold for buyers like you.

Meanwhile, jewellers are lobbying to reduce GST on gold from 3% to 1%. If this happens, buying gold will become even more affordable.

How to Avoid Overpaying on GST

Even though GST is fixed, there are ways to reduce your overall cost when buying gold:

• Check for the BIS Hallmark: This ensures the gold is genuine and meets purity standards. Never buy without this certification.
• Compare Making Charges: These typically range between 3% and 25%, with an industry average of 12%. Since GST applies to making charges too, choosing a jeweller with lower fees can save you thousands.
• Check the Gold Rate Before Buying: Gold prices change daily. Always verify the current rate before making a purchase.

Final Thought

Gold is a valuable investment, but taxes affect your final cost and returns. By understanding GST and import duties, you can time your purchase wisely and save money.