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The implementation of GST (Goods and Services Tax) has impacted the pricing of several goods and commodities in the market. Gold is one such commodity that has GST rates at different levels. As a result, GST on gold is applicable to both supply of the metal and the manufacture of gold ornaments. 

Individuals who wish to buy gold articles must have a depth idea regarding the varying GST rates on gold, as its introduction has impacted both the gold trade and the retail price of the metal. Individuals can gain deep insight into the different GST rates in the sections mentioned below.

GST Rates on Gold

As mentioned above, gold is one such item that attracts varying GST rates at different steps of purchasing and manufacturing it. The table below reflects the different GST rates on gold. 

Metal Types and Other Particulars

HSN Code

GST Rate

  • Precious stones and semi-precious stones are graded, mounted or set.

  • Ungraded precious stones and semi-precious stones that have been snugged temporarily.

Both graded and ungraded precious stones are exclusive of diamonds. 

 

 

7103, 7104

 

 

0.25%

Diamond, silver, pearl, gold or any articles of ornaments like silver or gold etc. 

7101, 7102, 7106, 7107, 7108, 7109, 7111, 7113, 7114, 7116, 7118

3%

Works that is related to cutting and polishing plain or embedded jewellery of gold, silver etc.

9988

1.5%

GST on Gold Making

Gold items that are purchased are considered goods, and individuals who take charge of goldsmiths and turn gold bars into ornaments are considered to offer a supply of service. Hence the GST rate on the making charge is different from that of the good as a whole. 

However, GST is not charged to customers if they buy or exchange gold ornaments from a jeweller not registered under the GST regime. In such cases, the jeweller will have to pay 5% of GST rates based on reverse charge. 

GST on Gold Purchase

Even for gold jewellery repair work, customers have to bear 5% GST rate as a part of the making charge. 

GST on Gold Exemption

At the 31st GST council meeting, conducted on 22nd December 2018, an exemption on the GST rate was declared if a Notified Agency has supplied the gold to registered exporters of golden jewellery. Such exemptions significantly lower the GST for gold purchases on the gold jewellery exporters, thereby making the country's gold export competitive in the global marketplace. However, it is imperative to note that the said GST exemptions are not applicable to domestic gold ornaments buyers. 

Impact of GST on Gold

In general, under the GST regime, the price of gold has moved towards being expensive. Here are the following pointers that will highlight the impact of GST on gold in detail. 

  • Effect on gold import

A customs duty of 10% is charged on gold items that are imported from overseas, besides the GST charge of 3%. The rising gold price today with GST has lowered the demand for it. Hence, it might not be the ideal time to invest in imported gold. 

  • Effect on unorganised sectors

According to statistics, around 20 tonnes of gold are imported illegally. More certainly, a gold price hike will lead to more of such activities. However, as the GST regime mandates sellers to keep track of every transaction, such illegal activities will be curbed to a greater extent. 

  • Effect on organised sectors

Notably, only 30% of gold sectors can be considered organised. The introduction of GST will increase the authenticity and accountability of these sectors. On the flip side, as the gold price with GST today is higher, it can prompt vendors to sell gold articles without a bill.

Gold Price Comparison Before and After GST

After the introduction of GST, different particulars, including service tax, VAT etc., included in setting the price of gold have undergone a change. The table below highlights the comparison of gold prices before and after the GST implementation. 

For ease of understanding, the price of 25 grams of gold has been considered in the table below. 

Specifics of Gold Pricing

Before GST Pricing 

Under GST Pricing

Base price of 25 gm gold (I)

Rs. 10000

Rs. 10000

Basic customs duty of 10% (II)

Rs.10000

Rs.10000

Service Tax charged on the sum of gold price and making charges (III)

Rs. 1100

NA

GST of 3% levied on sum of gold and making charges (IV)

NA

Rs. 3300

VAT of 1% charged on collective sum of (I+II+ III)

Rs. 1330.20

NA

Total price payable for 25 gm of raw gold

Rs. 112433.20

Rs. 113300

GST Calculation on Gold in Details

As the billing system varies among sellers or jewellers, a standard invoicing pattern is followed. However, the general formula that is used to calculate the final price of gold jewellery is-

Gold price X Weight (grams) + Making charges + GST of 3% applied on prices of jewellery and making charges.

 

In conclusion, selling gold ornaments is a combination of the supply of goods and services. Hence, the GST on gold differs in every step. Moreover, these varying GST on different gold trade has also resulted in complicated tax filling processes for gold traders and manufacturers. Hence, it is important for buyers to have deep knowledge regarding the intricacies while making a purchase.

FAQS on GST on gold

  • ✔️What is gold's GST rate?

    The GST on gold as good is 3%. However, a GST rate of 5% applies to the making charge of gold ornaments.

  • ✔️How much is GST chargeable in India on gold?

    In India, the gold GST percentage is 3%. However, a different rate is charged for making charges.

  • ✔️What price does gold's GST start with?

    There is no particular price above which GST on gold is charged. On buying gold items, buyers must pay the designated GST rate.

  • ✔️Is there a gold GST benefit available?

    One of the notable GST benefits is that if the Notified Agency makes the gold supply to registered gold exporters, no GST rate is charged, which leads to significant savings.

  • ✔️Does an individual have a right to claim GST on gold?

    Yes, individuals can claim GST on gold if they are registered under GST. A registered jeweller can claim 2% of input tax credit on the making charges.