GST Rates on Gold: The Complete Breakdown
Gold attracts a special GST rate outside the standard slab structure. While most goods fall under 5%, 18%, or 40% after GST 2.0, gold retains its dedicated 3% rate.
Why 3% and not 5% or 18%? The GST Council retained 3% for gold to keep the tax incidence close to the pre-GST level 1% VAT + 1% excise = ~2%). A higher rate would push buyers toward unorganized markets and cash transactions, undermining the formalization objective of GST.
How GST Is Calculated on Gold Jewellery
Every gold jewellery purchase has two components, each taxed at a different rate:
- Gold value = Weight (grams) x Gold rate per gram x 3% GST
- Making charges = Labour/craftsmanship charges x 5% GST
Calculation Example
Purchase: 22K gold necklace, 20 grams. Gold rate: Rs 7,500/gram. Making charges: Rs 800/gram.
The invoice must show gold value, making charges, CGST, SGST (or IGST for interstate), and total separately. A composite invoice that clubs everything together violates GST invoicing rules.
IGST on Interstate Purchase
If you buy jewellery in Mumbai but the jeweller's GSTIN is registered in Rajasthan, 3% IGST applies on gold value and 5% IGST on making charges. No CGST/SGST split in interstate transactions.
GST on Old Gold Exchange
When you exchange old jewellery for new, the GST treatment follows a specific logic:
How It Works
- Old gold given by you (individual): No GST. You are selling a personal asset, not making a business supply.
- New gold added by the jeweller: 3% GST on the value of additional gold.
- Making charges on new jewellery: 5% GST.
Exchange Example
Key point: GST is levied on the net gold value (new minus old), not on the full value of the new jewellery. This is a significant saving for exchange transactions. However, the jeweller must issue a proper invoice showing the exchange value, net gold value, and the GST calculation.
When the Jeweller Resells Old Gold
When a registered jeweller buys old gold from an individual and resells it:
- Margin scheme (Rule 32 5) of CGST Rules): If the jeweller resells the old gold without changing its form, GST applies only on the profit margin (selling price minus purchase price). If the purchase price is higher than the selling price, no GST is due.
- If the jeweller melts and refashions the gold: Standard 3% GST applies on the full sale value of the new product, with ITC available on inputs.
GST on Gold Imports
Gold imported into India attracts:
IGST paid on import is available as ITC for registered jewellers, offsetting against the GST on outward supplies (domestic sales).
Dore bars (semi-pure gold imported for refining) attract a slightly lower BCD of 5.35%.
HSN Codes for Gold: Detailed Classification
Chapter 71: Precious Metals
SAC for Making Charges
When filing GSTR One, jewellers must report gold sales under the relevant 4/6-digit HSN code and making charges under SAC 9988.
Input Tax Credit (ITC) for Jewellers
Registered jewellers can claim ITC on:
- Gold purchased from registered dealers: 3% GST paid on gold procurement
- Making charges paid to karigars (artisans): 5% GST if the karigar is registered
- Business expenses: Rent, packaging, advertising, software, accounting services
ITC not available on:
- Gold purchased from unregistered individuals (no GST invoice)
- Personal use items
- Motor vehicles and related expenses (unless the business involves vehicle trading)
Reconciliation requirement: Match your GSTR TwoB inward supply data with purchase invoices. ITC is auto-populated from supplier-filed GSTR One data. If your supplier has not filed their return, the ITC will not appear in your GSTR TwoB, and you cannot claim it.
E-Invoice Requirements for Jewellers
From April 2025, e-invoicing is mandatory for businesses with turnover above Rs 5 crore. For jewellers crossing this threshold:
- Every B2B invoice must be registered on the Invoice Registration Portal (IRP) and carry a unique IRN (Invoice Reference Number) and QR code
- B2C invoices above Rs 25,000 must carry a dynamic QR code
- The HSN code 7113 for jewellery, 7108 for gold bars) must be part of the e-invoice JSON schema
Smaller jewellers below Rs 5 crore are currently exempt from e-invoicing but must still report HSN codes in GSTR One 4-digit minimum).
Hallmarking and GST
Hallmarking is mandatory for gold jewellery sold in India (BIS mandate). The hallmarking charges incurred by the jeweller attract 18% GST (testing and certification services). This GST is available as ITC to the jeweller.
The consumer does not pay GST on hallmarking separately. The hallmarking cost is embedded in the making charges or sale price, and GST is collected on the overall transaction as described above.
Job Work in the Gold Industry
Many jewellery businesses outsource manufacturing to artisans (karigars). The GST treatment:
1-year time limit: Under Section 143 of the CGST Act, goods (including gold) sent for job work must be returned within 1 year. If not, the principal must treat it as a deemed supply and pay GST. Jewellers must maintain strict records of gold sent to and received from job workers.
Frequently Asked Questions
Q: Is GST applicable when I sell my personal gold jewellery? No. Individuals selling personal jewellery are not making a "supply" under GST. GST applies only to supplies made in the course or furtherance of business. However, capital gains tax under the Income Tax Act may apply depending on the holding period.
Q: My jeweller charged me 3% on the total bill (gold + making). Is that correct? No. Making charges should be taxed at 5%, not 3%. If the jeweller applies 3% on the combined value, they are undercharging GST on making and overcharging on gold. Ask for a split invoice showing gold value 3%) and making charges 5%) separately.
Q: Does GST apply on gold purchased through digital gold platforms (PhonePe, Google Pay)? Yes. Digital gold purchases attract 3% GST on the gold value. The platform or the gold partner (typically MMTC-PAMP or Augmont) charges this at the time of purchase. No separate making charges apply since you are buying gold grams, not jewellery.
Q: Can I get a GST refund on gold jewellery bought for export? Registered exporters can claim ITC on gold purchased for making export jewellery. If exporting under LUT (Letter of Undertaking), no IGST is charged on the export, and accumulated ITC can be claimed as a refund under Section 54.
Q: What is the GST on gold ETFs or Sovereign Gold Bonds? Gold ETFs and Sovereign Gold Bonds (SGBs) are financial instruments, not goods. They do not attract GST. However, brokerage/commission charged by the broker for buying ETFs/SGBs attracts 18% GST on the brokerage amount.
Source: GST Council rate notifications for Chapter 71 (Notification No. 01/2017-Central Tax Rate, as amended); CBIC Circular No. 47/21/2018-GST on old gold valuation; Rule 32 5) of CGST Rules, 2017 (margin scheme); Customs Tariff Act, 1975, Chapter 71. All rates and HSN codes verified as of June 2026.
