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Before introduction of GST, a commodity was taxed at multiple levels per the old indirect tax regime.

 

Taxation on silver was no different before the GST regime as a 1% excise duty was levied on it. On the other hand, states levied a value-added tax (VAT) of 1%, which could vary depending on a particular state’s policy. In addition to these taxes, there were certain other cesses and surcharges that were applicable when you purchased silver. 

 

However, GST did away with a multitude of taxes applicable to the purchase of silver at the Central and State level. Instead, the GST Council, the deliberative body of States and the Centre that decides on GST-related issues introduced a unified tax charged at 3%.  

 

Each commodity under the GST regime is identified by a unique code called the HSN code. HSN, or the ‘Harmonised System of Nomenclature,’ is a system devised by the World Customs Organisation for the systematic classification of different goods. 

 

Originally, it had six digits, but the Customs and Central Excise in India added two more digits. The same system of classification of goods has been adopted under the GST regime. Here is a table presenting GST rates on different silver HSN codes:  

Silver Articles 

Silver Articles HSN Code

GST Rate 

Silver (Including Silver Plated with Gold or Platinum), Unwrought or in Semi-manufactured Forms, or in Powder Form

7106

3%

Silver (Including Silver Plated with Gold or Platinum), Unwrought or in Semi-Manufactured Forms, or in Powder Form – Powder

71061000

3%

Unwrought

710691

3%

Silver (Including Silver Plated with Gold or Platinum), Unwrought or in Semi-Manufactured Forms, or in Powder Form - Other: Unwrought

71069100

3%

Grains

71069110

3%

Other

71069190

3%

Semi-Manufactured

710692

3%

Silver (Including Silver Plated with Gold or Platinum), Unwrought or in Semi-Manufactured Forms, Or in Powder Form Semi-Manufactured: Sheets, Plates, Strips, Tubes, And Pipes

71069210

3%

Bar

71069220

3%

Silver (Including Silver Plated with Gold or Platinum), Unwrought or in Semi-Manufactured Forms, or in Powder Form Semi-Manufactured: Other

71069290

3%

GST Effect on Silver

As mentioned above, a multitude of taxes were applicable on the purchase of silver. However, the GST on silver is a unified charge taxed at 3%. While the GST on silver has eliminated these multiple taxes, the rate of taxation has increased.

 

The following table presents how the introduction of GST has influenced the pricing of silver:

Particulars

Pre-GST Price

Post-GST Price

Silver Price (1 Kg)

₹60,000

₹60,000

Custom Duty (10%)

₹6,000

₹6,000

Sub-total

₹66,000

₹66,000

Excise Duty (1%)

₹6,600

-

Sub-total

₹72,600

₹66,000

VAT (1%)

₹7,260

-

Sub-total

₹79,860

₹66,000

3% GST Rate on Silver

-

₹19,800

Sub-total

₹79,860

₹85,800

GST for Silver Making Charges (12%)

₹7,920

₹7,920

Sub-total

₹87,782

₹93,720

GST for Silver Making Charges (5%)

-

₹396

Total Price

₹87,782

₹94,116

Disclaimer: Aforementioned silver rates are arbitrary and have been mentioned for analysing the impact of the GST rate on the price of silver.

What Are the Different Types of Taxes on Silver?

The following are the various types of taxes you will have to pay on your capital gains from selling your silver jewellery.

1. Short-term Capital Gains Tax 

If you sell silver before completing 36 months since its purchase, Short-term Capital Gains (STCG) tax will be applicable. Short-term capital gains are added to your taxable income and taxed as per the applicable tax slab rates.

2. Long-term Capital Gains Tax

If you sell your silver after holding it for more than 36 months, you will have to pay Long-term Capital Gains (LTCG) tax. The LTCG tax rate on the sale of movable property like gold and silver is 20.8% with indexation. 

3. Taxes on Silver ETFs   

Silver ETFs, or Exchange-traded Funds (ETFs), were launched in 2022. These investment avenues invest 95% of the funds towards silver or silver-linked securities. The returns you earn on silver ETFs are also classified as capital gains. 

 

So, the taxation on silver ETFs is the same as the sale and purchase of silver jewellery, bar, or coins. 

How to Calculate the Price of Silver for Taxation?

To calculate the price of silver for taxation, you need to understand that the cost of silver jewellery also includes other elements, such as hallmarking and making charges. The formula for calculating the silver price is: 

 

Rate of silver = Silver price per gram X the volume of the metal you have purchased X purity of the metal

 

To sum up, it is crucial to consider these essential points when planning to purchase silver. Knowing the taxes and other charges applicable to silver can help you make informed decisions. 

FAQS on Silver GST and HSN Code

How is silver taxed in India?

The silver is taxed as per the applicable silver GST rate of 3%.

What is the VAT on silver?

The value-added tax (VAT) on silver was a form of tax that was levied by states when purchasing silver. These taxes varied from one state to another. However, with the implementation of GST on silver, VAT was eliminated.

What is the HSN code for plain silver?

The HSN code for plain silver is 7106.

What does the HSN code 71069290 imply?

The Silver HSN code 71069290 is for Silver (Including Silver Plated with Gold or Platinum), Unwrought or in Semi-Manufactured Forms, or in Powder Form Semi-Manufactured: Other.

What is the HSN code for silver ornaments?

The HSN code for silver ornaments is 7113.  

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