GST on Gold and Silver Stays at 3% Ahead of Festive Season

GST on Gold and Silver Remains at 3% as Council Holds Rates Before Festive Season

Aakash Jain Posted on October 25, 2025

GST 2.0 Reforms Roll Out, Precious Metal Rates Stay at 3%

The 56th GST Council meeting held on September 3, 2025, marked a landmark reform in India's indirect tax regime with the rollout of GST 2.0. This reform simplified tax slabs from four to primarily two core rates, 5% and 18%, alongside the introduction of a new 40% slab for luxury and sin goods. Despite this overhaul, the GST rate on gold and silver has been left untouched at a uniform 3% rate on the value of the metal. Additionally, the GST on making charges for gold and silver jewellery remains at 5%.

The decision to maintain Gold’s GST rate and Silver’s GST rate in 2025 at 3% offers stability for consumers and jewellers alike. Industry players welcomed this move as the festive season approaches, a period typically witnessing a surge in gold and silver demand. Stability in tax rates protects consumer sentiment and supports ongoing sales without uncertainty that fluctuating taxes might cause.

This GST rate applies broadly across all forms of precious metals including gold jewellery, investments in gold coins and bars, as well as silver products such as silver bars and silver jewellery. The GST Council also preserved separate GST treatment on ‘making charges’, ensuring transparent pricing throughout the supply chain.

Shift from Four Slabs to Two Main Slabs

One of the significant highlights of GST 2.0 is the transition from four tax slabs, namely 5%, 12%, 18%, and 28%, to a streamlined two-tier system comprising 5% and 18%. This move aims to make compliance simpler and reduce the administrative burden on businesses and consumers. The 5% slab is designated for essential items and priority sectors, while 18% applies to most other goods and services.

The GST Council's restructuring benefits a broad spectrum of sectors but exempts the precious metals segment from this slab rationalisation. Gold and silver continue at the steadfast 3% slab, not fitting into the new two-slab system. This is due to the special status of these metals within the economy and their cultural importance in India.

Furthermore, the introduction of a 40% GST slab specifically targets luxury and sin goods like tobacco, pan masala, aerated beverages, personal aircraft, and yachts. This separate category ensures that luxury goods contribute proportionately higher tax revenues. The new system, thus, simplifies taxation for the majority of goods while maintaining targeted taxes where necessary.

Luxury Goods Attract New 40% GST Slab

Apart from the core 5% and 18% slabs, the new GST regime introduces a distinctive 40% tax slab for luxury and sin goods. This high-rate slab is designed to deter consumption of harmful or extravagant goods and to optimise government revenue. Tobacco products, alcohol, pan masala, and ultra-luxury goods like yachts and private aircraft fall into this category.

While precious metals like gold and silver are not luxury items in the traditional sense due to their cultural and investment significance, their GST rates remain modestly capped at 3%. This ensures accessibility to the wider population during critical buying periods such as festivals and weddings.

The introduction of the 40% slab reaffirms the government's focus on social welfare and fiscal balancing, distinct from the stable tax treatment enjoyed by gold and silver investments and jewellery. Importantly, this comprehensive tax structure brings clarity to consumers about where their purchases stand in the GST ecosystem.

Festive Season Implications for the Bullion Trade

The decision to freeze the GST rates on gold and silver at 3% just before the upcoming festive season has positive implications for the bullion trade. Festivities such as Diwali and Navratri traditionally spike demand for gold and silver jewellery as they are integral to Indian celebrations and auspicious events.

By keeping the GST on silver jewellery and gold jewellery unchanged, the Council has ensured price predictability. This not only encourages consumer confidence but also provides jewellers and retailers a stable environment to manage inventories and pricing.

Lower GST rates could potentially boost demand, but stability in taxation ensures that buyers are not caught off guard by sudden tax rate changes. The GST Council's move recognises this cultural and economic sensitivity, allowing for uninterrupted sales and steady revenue streams during the festive period.

GST stability also aids transparency, as buyers can calculate costs accurately, factoring in the 3% GST on metal value and 5% GST on making charges. This clarity benefits both consumers planning purchases and jewellers operating in a competitive marketplace.

Conclusion

In conclusion, the GST Council's decision to retain GST rates on gold and silver at 3% just before the festive season provides much-needed clarity and stability to the bullion trade. While the broader GST 2.0 reforms have simplified slabs to mainly 5% and 18%, precious metals remain in a special tax category, preserving their existing tax rates.

This move supports consumer confidence, stabilises the jewellery market, and aligns with India’s cultural emphasis on gold and silver during festivities. The introduction of the 40% slab for luxury and sin goods further enhances the balanced approach of the GST reforms.

FAQs

What is the current GST rate on gold and silver in 2025?

The GST rate on gold and silver is 3% on the value of the metal with an additional 5% GST on making charges for jewellery.

Has the GST rate for gold and silver changed under GST 2.0 reforms?

No, the GST rates on gold and silver remain unchanged at 3%, despite GST 2.0 reforms that streamlined other tax slabs.

What are the new main GST slabs introduced in 2025?

The GST Council reduced the slabs from four to two main slabs, namely 5% for essential items and 18% for most goods and services. A 40% slab was introduced for luxury and sin goods.