Gold is the single largest commodity purchase for Indian households. Whether you are buying a wedding necklace, investing in gold coins, or running a jewellery business, GST applies at every stage of the gold supply chain. The rates are lower than most goods (3% instead of the standard 18%), but the calculation involves two separate components: the metal value and the making charges.
This guide covers every GST scenario a gold buyer, investor, or jeweller will encounter under the current framework.
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GST Rate Structure for Gold and Jewellery
Tax Rate Chart
GST Rates on Gold and Gold Products (2026)
3% on metal value across all purities; 5% on making charges (service component)
Gold Jewellery (all purities: 18K, 22K, 24K)
HSN 7113 : ITC available for registered jewellers
Gold Bars, Biscuits, Ingots
HSN 7108 : ITC available
Gold Coins and Medallions
HSN 7118 : ITC available
Making Charges / Labour (service)
Charged separately on labour/design component
Silver Jewellery
HSN 7113 : same rate as gold
Artificial / Imitation Jewellery (base metal)
HSN 7117 : different category entirely
Source: Notification No. 1/2017-Central Tax (Rate) as amended; Schedule I (3% rate items)
| Gold Product | HSN Code | GST Rate | Making Charges GST | Total Effective GST |
|---|---|---|---|---|
| Gold jewellery (any purity) | 7113 | 3% on gold value | 5% on making charges | 3% + 5% (on respective components) |
| Gold bars and biscuits | 7108 | 3% | Not applicable | 3% |
| Gold coins | 7118 | 3% | Not applicable (if plain) | 3% |
| Silver jewellery | 7113 | 3% on silver value | 5% on making charges | 3% + 5% |
| Platinum jewellery | 7113 | 3% on metal value | 5% on making charges | 3% + 5% |
| Artificial jewellery | 7117 | 18% | Not applicable (included) | 18% |
The 3% rate applies uniformly to gold of all purities. Whether you buy 18-karat, 22-karat, or 24-karat gold, the GST rate on the metal component remains 3%.
How GST Is Calculated on a Gold Jewellery Purchase
The invoice for a gold jewellery purchase has two taxable components:
- Gold value (weight x per-gram rate): Taxed at 3%
- Making charges (labour, design, craftsmanship): Taxed at 5%
Worked Example
You buy a 22K gold necklace weighing 20 grams. The gold rate is Rs 7,500 per gram. Making charges are Rs 1,500 per gram.
| Component | Calculation | Amount |
|---|---|---|
| Gold value | 20g x Rs 7,500 | Rs 1,50,000 |
| GST on gold (3%) | 3% of Rs 1,50,000 | Rs 4,500 |
| Making charges | 20g x Rs 1,500 | Rs 30,000 |
| GST on making charges (5%) | 5% of Rs 30,000 | Rs 1,500 |
| Total payable | Rs 1,86,000 |
The total GST paid is Rs 6,000 (Rs 4,500 + Rs 1,500) on a pre-tax value of Rs 1,80,000. The effective GST rate works out to approximately 3.33%.
Old Gold Exchange: How GST Applies
When you surrender old gold jewellery and buy new jewellery, GST applies only on the net additional value you pay, not on the value of old gold surrendered.
Exchange Calculation Example
You surrender an old gold chain (15 grams, valued at Rs 1,05,000) and buy a new necklace (20 grams, gold value Rs 1,50,000, making charges Rs 30,000).
| Component | Amount |
|---|---|
| New jewellery gold value | Rs 1,50,000 |
| Less: Old gold value (credit) | Rs 1,05,000 |
| Differential gold value | Rs 45,000 |
| GST on differential gold (3%) | Rs 1,350 |
| Making charges on new piece | Rs 30,000 |
| GST on making charges (5%) | Rs 1,500 |
| Net amount payable | Rs 77,850 |
The jeweller treats the old gold as a purchase. If the customer is unregistered (most retail buyers), the jeweller records it as a purchase from an unregistered person. No reverse charge applies on gold purchased from unregistered individuals under current GST provisions.
Margin Scheme for Second-Hand Gold
When a registered dealer buys old gold jewellery from an individual and resells it without melting or altering the purity, the margin scheme under Rule 32(5) of the CGST Rules applies.
Under the margin scheme:
- GST is charged only on the profit margin (selling price minus purchase price), not on the full sale value
- The dealer cannot claim ITC on the purchase
- The scheme applies only when the goods are sold without any processing that changes their identity
Margin Scheme Example
A jeweller buys old gold bangles from a customer for Rs 80,000 and resells them for Rs 90,000.
| Component | Amount |
|---|---|
| Selling price | Rs 90,000 |
| Purchase price | Rs 80,000 |
| Margin (taxable value) | Rs 10,000 |
| GST at 3% on margin | Rs 300 |
Without the margin scheme, GST would be Rs 2,700 (3% of Rs 90,000). The scheme saves Rs 2,400 in this transaction.
HSN Codes for Gold and Related Products
| Product | HSN Code | Description |
|---|---|---|
| Gold in unwrought form (bars, biscuits, ingots) | 7108 | Gold (including gold plated with platinum) unwrought or in semi-manufactured forms |
| Gold jewellery and ornaments | 7113 | Articles of jewellery and parts thereof, of precious metal |
| Gold coins (not legal tender) | 7118 | Coin |
| Gold waste and scrap | 7112 | Waste and scrap of precious metal |
| Silver jewellery | 7113 | Same heading as gold jewellery |
| Artificial/imitation jewellery | 7117 | Imitation jewellery (base metal with plating) |
| Precious stones (unset) | 7103 | Precious stones other than diamonds |
| Diamonds (uncut) | 7102 | Diamonds, whether or not worked, but not mounted or set |
Jewellers must use the correct HSN code on every tax invoice. Businesses with annual turnover above Rs 5 crore must use 6-digit HSN codes. Businesses below Rs 5 crore may use 4-digit codes.
Import of Gold: Customs Duty and IGST
Gold imports into India attract multiple levies. The combined duty structure after the Union Budget 2024-25 reduction:
| Levy | Rate | Applied On |
|---|---|---|
| Basic Customs Duty (BCD) | 5% | CIF value (cost + insurance + freight) |
| Agriculture Infrastructure and Development Cess (AIDC) | 1% | CIF value |
| IGST | 3% | CIF value + BCD + AIDC |
| Total effective duty | ~9.18% |
Import Duty Calculation Example
A jeweller imports 100 grams of 24K gold at a CIF value of Rs 75,00,000.
| Levy | Calculation | Amount |
|---|---|---|
| BCD (5%) | 5% of Rs 75,00,000 | Rs 3,75,000 |
| AIDC (1%) | 1% of Rs 75,00,000 | Rs 75,000 |
| Assessable value for IGST | Rs 75,00,000 + Rs 3,75,000 + Rs 75,000 | Rs 79,50,000 |
| IGST (3%) | 3% of Rs 79,50,000 | Rs 2,38,500 |
| Total duty | Rs 6,88,500 |
The IGST paid on import (Rs 2,38,500) is available as Input Tax Credit against your output GST liability. BCD and AIDC are not creditable.
ITC Rules for Jewellers
Registered jewellers can claim ITC on:
- Gold purchased from registered suppliers (3% GST paid on purchase invoices)
- IGST paid on gold imports (3% IGST on assessed value)
- Rent, utilities, and professional services used for business (at respective GST rates)
- Packaging materials, display cases, and shop supplies (at respective rates)
ITC is not available on:
- Gold purchased from unregistered individuals (no GST invoice exists)
- Personal consumption or gifts to non-business recipients
- Motor vehicles (blocked under Section 17(5) unless you are in the transport business)
ITC Reconciliation for Jewellers
Jewellers must reconcile their GSTR-2B (auto-populated ITC from supplier filings) with their purchase register monthly. Gold supply chains often involve multiple intermediaries (refiners, wholesalers, retailers), and mismatches in HSN codes or GSTIN reporting are common.
Composition Scheme for Small Jewellers
Jewellers with annual turnover up to Rs 1.5 crore (Rs 75 lakh in special category states) can opt for the Composition Scheme:
| Feature | Regular Scheme | Composition Scheme |
|---|---|---|
| GST rate | 3% on gold + 5% on making charges | 1% on total turnover (0.5% CGST + 0.5% SGST) |
| ITC claim | Available | Not available |
| Invoice format | Tax invoice with GST breakup | Bill of supply (no GST collection from customer) |
| Filing frequency | Monthly (GSTR-1, GSTR-3B) | Quarterly (CMP-08) + annual (GSTR-4) |
| Inter-state sales | Allowed | Not allowed |
| E-commerce sales | Allowed | Not allowed |
The composition scheme works well for small jewellers who primarily sell locally and have low input costs relative to their turnover. However, since gold is a high-value, low-margin business, the inability to claim ITC on gold purchases often makes the composition scheme less attractive than the regular scheme for most jewellers.
Hallmarking and GST: Separate Compliance Requirements
BIS hallmarking has been mandatory for gold jewellery sold in India since June 2021. Hallmarking certifies the purity of gold (14K, 18K, 20K, 22K, or 24K) and does not affect GST rates.
However, hallmarking has practical GST implications:
- Hallmarking charges are a service and attract 18% GST (SAC 998346). Jewellers can claim ITC on hallmarking fees.
- HUID (Hallmark Unique Identification) number must be maintained in stock records for audit trails.
- Non-hallmarked gold jewellery cannot be sold in India (with limited exemptions for export orders and specific traditional jewellery items under 2 grams).
GST on Digital Gold and Gold ETFs
| Product | GST Treatment | Rate |
|---|---|---|
| Digital gold (Paytm Gold, PhonePe Gold, etc.) | 3% GST on purchase (included in the price quoted to you) | 3% |
| Gold ETF units | No GST on ETF unit purchase/sale (treated as securities) | Exempt |
| Sovereign Gold Bond (SGB) | No GST (government security) | Exempt |
| Gold mutual funds (fund of fund investing in gold ETF) | No GST on unit purchase/sale | Exempt |
When you buy digital gold through an app, the platform purchases physical gold on your behalf. The 3% GST is embedded in the quoted price. When you redeem digital gold for physical delivery, additional making charges (if any) attract 5% GST.
E-Way Bill for Gold Transport
Gold worth above Rs 50,000 being transported requires an e-way bill under GST. For jewellers:
- E-way bill is required for consignment value exceeding Rs 50,000
- The bill must be generated before the goods are moved
- Validity depends on distance: 200 km per day for normal cargo
- Gold transported by registered courier or transporter must carry the e-way bill
Given the high value-to-weight ratio of gold, even a small parcel of gold jewellery typically exceeds the Rs 50,000 threshold.
Practical Compliance Checklist for Jewellers
- Invoice correctly: Separate line items for gold value (3%) and making charges (5%). Never club them into a single line.
- HSN code on every invoice: Use 7113 for jewellery, 7108 for bars/biscuits, 7117 for artificial jewellery.
- Old gold purchases: Maintain a proper purchase voucher for every old gold transaction, even from unregistered individuals. Record the customer's name, address, PAN (if above Rs 2 lakh), and weight/purity of gold surrendered.
- Stock register: Maintain a daily stock register with opening stock, purchases, sales, and closing stock by weight and purity.
- GSTR-1 reporting: Report B2C sales (below Rs 2.5 lakh per invoice) as consolidated entries. B2B sales require invoice-level reporting.
- Annual return (GSTR-9): Reconcile annual sales, purchases, ITC claimed, and tax paid. Due by December 31 of the following financial year.
- TCS under Income Tax: Jewellers receiving cash payments exceeding Rs 5 lakh must collect TCS at 1% under Section 206C(1H) (now Section 390 under the new Income Tax Act 2025).
Source: Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017 as amended; CGST Rules 2017, Rule 32(5) (margin scheme); Bureau of Indian Standards (Hallmarking) Regulations 2018 as amended; Customs Notification No. 25/2024-Customs dated 23 July 2024 (revised gold import duty).
