GST on Gold Ornaments & Jewelry in India 2024

The introduction of GST has brought about significant changes in the gold market including GST on gold ornaments, particularly in terms of purchasing and manufacturing charges. Previously, there was a mere 1% excise duty and approximately 1% VAT imposed on gold ornaments. However, the implementation of GST has resulted in a substantial increase, with a 3% tax on gold and silver, as well as an additional 5% on making charges. As such, the overall tax burden has risen, causing a noticeable rise in jewelry prices. It is worth noting that a 10% import duty on gold is still in place. It is evident that GST has had a profound impact on the entire gold industry, emphasizing the need for consumers to stay informed about these changes. Let’s explore topic of the GST on gold ornaments and jewelry in India.

GST on Gold Ornaments & Jewelry in India 2024

Table of Contents

What is GST on Gold?

When purchasing gold jewelry, it is important to keep in mind that GST applies to both the actual purchase price and any additional charges for making the piece. What is even more important to note is that the GST rates vary for each component – purchase, making, and import. However, there is a silver lining – when exchanging old gold for new, you will not be subject to GST on the new purchase. Therefore, having a thorough understanding of the different GST rates for gold ornaments is crucial when expanding your jewelry collection.

What is GST on gold ornaments?

Selling gold jewelry encompasses both the tangible and intangible, where the gold serves as the product and the skilled craftsmanship acts as the service. As the primary focus is on the gold being sold, a GST rate of 3% is applied. However, for those seeking services such as molding a gold biscuit or repairing a piece of jewelry, the GST rate increases to 5%. Understanding these fluctuating rates is essential in making smooth and efficient transactions with goldsmiths.

Gold has always been a popular investment choice for Indians and a symbol of joyful occasions. But with the implementation of Goods and Services Tax (GST) in 2017, the gold market underwent a significant change, affecting both trade and retail prices. The introduction of different rates of GST on gold ornaments added a layer of complexity, posing a challenge for traders and manufacturers in terms of tax filing.

Exemptions for GST on Gold

The recent announcement of a GST exemption during the 31st GST Council meeting on December 22, 2018, has significant implications. Effectively, this means that gold supplied by the notified agency to GST-registered gold jewelry exporters will not be subject to GST. Not only does this relief ease the financial burden for exporters, but it also has the potential to bolster India’s standing in the international gold market. It is worth noting, however, that this modification does not apply to domestic buyers of gold jewelry.

GST Exemption for Profit on Reselling Second-Hand Gold: AAR Karnataka

The Karnataka Authority of Advance Ruling (AAR) has determined that purchasing pre-owned gold jewelry from unregistered vendors and subsequently selling it, whether to registered or unregistered dealers, is not subject to GST. This ruling is based on Rule 32(5) of the CGST Rules, 2017, which states that GST is not applied to the profit margin generated from such transactions. Therefore, it is now clear that the resale of used gold jewelry does not entail any GST on the profit earned.

Impact of GST on Gold Ornaments & Jewelry

When looking at the combined supply of goods before and under GST, it is clear that a price rise of about Rs 1,354 has occurred, resulting in a 1.1% increase. This change can be attributed to the adjustment of the GST tax rate from 2% to 3% on pure gold or gold bars.

Furthermore, the implementation of GST has now extended to cover making charges, a notable change from the previous tax system.

As of Budget 2019, the customs duty on imported gold bars has also been raised from 10% to 12.5%, further contributing to the overall increase in the cost of gold.

Read also: 2-Factor Authentication in GST (2FA) – Important GSTN Advisory

Considerations Before Buying Gold Ornaments

Purchasing gold ornaments is not only a treasured investment and a mark of prestige for countless Indian households, but it also calls for careful consideration.

  • To ensure authenticity and purity, it is crucial to choose BIS certified or hallmarked jewelry.
  • Additionally, opting for lower-quality gold can result in lower GST rates, leading to cost savings.
  • For jewelry adorned with precious or semi-precious stones, it is essential to ensure that they are explicitly listed on the bill, as they are taxed separately under GST regulations.
  • Stay updated on the daily fluctuations of gold prices is vital, as it impacts the applicable GST rate, making it a crucial factor to keep in mind.


Ever since the introduction of GST, the price of gold has skyrocketed, causing a decline in consumer demand. This tax hike is likely to also spur illegal smuggling as individuals look for more affordable options. On top of that, the rise in taxes may push certain transactions into the shadows, causing legitimate jewelers to suffer a decrease in sales.

Frequently Asked Questions (FAQ)

At present, the gold market sees a triple tax threat: a 3% Goods and Service Tax applied to the base price, an extra 5% added on for making charges, and a hefty 7.5% import duty. This means that the final cost for pure gold is a staggering 10.5% higher than its original price due to the cumulative effect of taxes and duties.

The HSN code assigned to silver ornaments is 7113, and in India, this silver is subject to a 3.00% tax rate under the GST system.

In the jewelry sector, there is not a standard way of calculating GST on gold ornaments due to different billing systems among jewelers. However, a common formula is:

(Price of gold X Weight of gold in grams) + Making charges + 3% GST on (Price of jewelry + Making charges)

The Gold on gold bar is 3%.

The rate of GST on hallmark gold is 3%, while making charges attract a 5% GST rate.

The GST rate on digital gold is 3%

No, you do need to pay GST when exchanging old gold jewelry for new jewelry in India.

As a GST-registered business that sells gold jewelry, you have the opportunity to claim input tax credit (ITC) for any GST paid on your gold purchases. However, if you are a registered entity that does not deal in gold jewelry, you will not be able to benefit from ITC on your gold purchases.

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