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In India, the Goods and Services Tax (GST) on silver is fixed at a standardised rate of 3% for all forms of silver. This includes bars, grains, unwrought silver, silver powder, and semi-manufactured silver. The Harmonised System of Nomenclature (HSN) code 7106 covers these forms of silver and helps streamline taxation and classification. Additionally, making charges on silver jewellery attract a separate GST rate of 5%, applied to the labour or craftsmanship involved. This unified GST rate replaced the complicated pre-GST regime, which had an excise duty of 1% and varying VAT rates based on individual state policies.
Before the implementation of GST in 2017, silver taxation in India was fragmented, leading to varying tax rates across states. Post-GST, a unified tax structure was introduced to simplify the taxation process.
Below is a detailed breakdown of the silver prices before and after the implementation of GST:
| Aspect | Pre-GST (Before July 2017) | Post-GST (After July 2017) |
|---|---|---|
Tax Structure |
Fragmented with multiple taxes |
Unified under a single GST rate |
Excise Duty |
1% |
Subsumed under GST |
VAT (Value Added Tax) |
1% to 5%, varying by state |
Replaced by 3% GST nationwide |
GST Rate on Silver |
Not applicable |
3% (CGST 1.5% + SGST 1.5%) |
GST Rate on Making Charges |
Not applicable |
5% on the labour or craftsmanship involved in jewellery making |
HSN Code for Silver |
7106 (for silver metal) and 7113 (for silver ornaments) |
7106 (for silver metal) and 7113 (for silver ornaments) |
Tax Calculation Example |
Base price of Rs. 60,000/kg + 1% excise + 1% VAT (state-dependent) = Approx. Rs. 79,860/kg |
Base price of Rs. 60,000/kg + 3% GST = Rs. 66,000/kg (excluding making charges) |
State-level Variability |
Significant, due to differing VAT rates across states |
Eliminated, as GST is uniform across India |
Impact on Trade |
Complex, with varying tax rates and compliance requirements across states |
Simplified, with a single tax rate and uniform compliance requirements |
Disclaimer: The figures and examples provided are illustrative and based on the tax structures before and after the implementation of GST in India. The actual tax liabilities may vary based on specific circumstances and are subject to changes in tax laws and rates.
Silver in India is subject to various taxes, including Goods and Services Tax (GST), customs duties, and capital gains tax, depending on the form and purpose of the silver. Understanding these taxes is crucial for consumers, investors, and businesses dealing with silver.
Below is a detailed breakdown of the different taxes applicable to silver in India:
| Tax Type | Description | Applicable Rate | Applicable On |
|---|---|---|---|
GST on Silver |
Tax on silver metal value (bars, grains, powder, unwrought, semi-manufactured) |
3% (CGST 1.5% + SGST 1.5%) |
All forms of silver (HSN Code: 7106) |
GST on Making Charges |
Tax on craftsmanship or labour charges for silver jewellery |
5% |
Jewellery making charges (HSN Code: 7113) |
IGST on Imports |
Integrated GST on imported silver |
3% |
Imported silver (in addition to basic customs duty) |
Customs Duty |
Import duty on silver imports |
6% |
Imported silver |
Short-term Capital Gains Tax (STCG) |
Tax on profits from silver sold within 36 months of purchase |
As per income tax slab |
Sale of silver within 36 months |
Long-term Capital Gains Tax (LTCG) |
Tax on profits from silver sold after 36 months of purchase |
20.8% (including cess) |
Sale of silver after 36 months |
GST on Silver Coins |
Tax on silver coins (non-legal tender) |
3% |
Silver coins (non-legal tender) |
GST on Silver Ornaments |
Tax on silver jewellery and ornaments |
3% |
Silver jewellery and ornaments (HSN Code: 7113) |
Disclaimer: The tax rates and information provided in the table are based on the latest available data as of September 2025. These rates are subject to change based on government policies and amendments. It is advisable to consult with a tax professional or refer to official government notifications for the most current information.
To calculate the price of silver after taxation, the GST formula considers the base price, volume, purity, and applicable taxes. The formula is:
Silver Price After Tax = (Silver price per gram × Quantity in grams × Purity) + 3% GST on the metal's value.
When buying silver jewellery, if making charges are billed separately, add 5% GST on those charges to the total.
Example: If purchasing 100 grams of silver with 99.9% purity priced at Rs. 60 per gram, first calculate the metal value:
(60 × 100 × 0.999) = Rs. 5,994.
The GST amount at 3% on this metal value = Rs. 179.82.
If making charges are Rs. 500, GST on making charges at 5% = Rs. 25.
Total cost = Rs. 5,994 + Rs. 179.82 + Rs. 500 + Rs. 25 = Rs. 6,698.82.
The HSN code for plain silver, including unwrought and semi-manufactured forms or powder, is 7106. This code covers bars, grains, powder, and sheets made of silver.
Silver ornaments fall under the HSN code 7113. This includes crafted jewellery and other ornamental silver articles.
Yes, silver coins are subject to GST. Non-legal tender silver coins used for gifting, puja, or collections attract a 3% GST rate.
Before GST, silver was liable for VAT ranging generally around 1%, varying by state. After GST, VAT has been subsumed and effectively replaced by the single 3% GST rate across India.
Silver is taxed at a flat GST rate of 3% on its metal value, with charges on jewellery attracting an additional 5% GST. Imports attract customs duty along with GST. Different GST components like CGST, SGST/UTGST, and IGST apply depending on the sale type.
The HS code for scrap silver is 71129900. This is distinct from the codes for unwrought or semi-manufactured silver.
The HSN code under GST is typically 8 digits long. It is mandatory to declare all eight digits in tax invoices, especially for exports and imports.
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