What is GST on Gold & GST Rate 2021 ?

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What is GST on Gold?

With the implementation of GST, there was a large-scale impact on most of the goods and services, primarily affecting the price of the commodities. Gold is one of such products whose price got affected by the new taxation regime. The impact was noticed at different levels; gold value, making of gold jewelry, and imports of gold. While, it was assumed that the introduction of GST will bring transparency and accountability in the gold sector, however contrary to the expectations, vendors are shifting to the unorganized gold market and importing raw gold illegally because of the rise in gold rates.GST on Gold Vs Pre GST on Gold


Any tax on the supply of products, services, or both, excluding taxes on the supply of alcoholic beverages for human consumption, is referred to as a “goods and services tax.” The Indian government levies GST on both the manufacturing and the services of gold. When you buy gold jewelry, you must pay GST on the gold as well as the making charges. Gold is one of the few products that are subject to varying GST rates at various stages of its life cycle, from purchase to manufacturing. As a result, the GST on gold refers to both the availability of gold and the production of gold ornaments. However, if a person sells old gold and uses the money to buy new jewelry, he or she does not have to pay taxes. Another way to put it is that by simply buying new gold in exchange for old gold pieces, one can save on GST taxes.

To understand the impact on the gold rate after the implementation of GST, consider this example. Suppose the gold rate of 24K 10 gms gold is ₹ 45,000 and the import duty of 10% is charged on gold. Further, the making charges of gold is ₹ 3,000, the price of gold before and after GST will be as follows.

Taxes On Gold Before GST After GST
Price of 10 gm gold ₹ 45,000 ₹ 45,000
Customs Duty (10%) ₹ 4,500 ₹ 4,500
Service Tax +VAT(2%) ₹ 990 NIL
GST on Gold (3%) NIL ₹ 1,485
Total value of gold ₹ 50,490 ₹ 50,985
Making charges ₹ 3,000 ₹ 3,000
GST on making charges (5%) NIL ₹ 150
Total Price of Jewelry ₹ 53,490 ₹ 54,135


GST on Gold Jewellery

If you want to purchase a 25-gram gold chain or jewellery, you will have to pay: Tax Price Before GST Price After GST Price of 25 gm of gold Rs. 100,000 Rs. 100,000 Customs Duty 10% Rs. 10,000 Rs. 10,000 Service Tax 1% Rs. 1,100 NIL GST 3% NIL Rs. 3,300 VAT 1.2% Rs. 1,333.20 NIL Making Charges (Above 10%) 10% Rs. 11,000 Rs. 11,000 GST on Making Charge 5% NIL Rs. 550 Total price of 25 gm Gold Jewellery Rs. 1,23,433.20 Rs. 1,24,850

Gold GST Rate on Gold Value

After the implementation of GST, a tax of 3% was levied on gold and gold-related jewelry above the price of the gold. This cost was passed to the final consumers when they purchased the gold ornaments. Before the GST, a service tax of 1% and VAT of 1% were charged on the price of the gold, thus increasing the gold rates.

GST on Gold Ornaments

In India, most of the raw gold is imported from overseas, which is then used for making gold ornaments. While previous to the implementation of GST, there were no making charges on the gold. However, a GST of 18% was levied on the making charges of gold as goods and services tax was implemented in India. This was eventually reduced to 5% due to rising concerns and protests. Presently, the consumer has to bear 3% GST on gold value, 5% GST on making charges.

Revised Tax Rates on Gold Jewelry under GST

Before the implementation of GST, a service tax and VAT (Value Added Tax) of 1% each were levied on gold. Thus, an extra 2% was charged on the selling price of the gold to the consumers. Gold became more expensive when the GST of 3% was fixed on the gold. However, there was a relief as gold making charges were reduced to 5% as against to 18% before the implementation of GST. In India, as most of the gold is imported from outside to make jewelry and the import duty of 10% is charged on the import of gold, thus gold imports became more expensive after the GST.

Exemption of GST on gold

Under the scheme for ‘export against supply by the nominated agency,’ the government issued a list of notified public and private sector banks that were exempted from paying GST on imports of gold, thus briDifferent Rates applicable on Gold nging a huge relief to the notified agencies. However, there was no effect on the gold rates for the gold vendors with the decision taken after the 31st GST Council meeting on 22nd December 2018.


Buying Gold Jewelry: Key Factors to Keep in Mind

The precious yellow metal is considered auspicious in India. It not only has ornamental value but is also a significant option for investments. Here are a few things that you must keep in mind while buying gold jewelry.

  • Check the purity of gold: The most considerate factor while buying gold is to check the purity of gold. The purity of gold can be determined using hallmarking, which is accredited by the accrediting agency ‘The Bureau of Indian Standards (BIS). The hallmark jewelry will have a number attached to it along with a BIS stamp on it. You can look for the letter K along with the number on the jewelry. 24K gold is called pure gold or 100 percent gold.
  • Cross-check the gold price: The cost of the jewelry is based on the weight and the purity of gold. For instance, the price of 22 carat gold of 10 gm will be higher than 18 carat gold of the same weight. The price of gold changes every day with the change in the gold rate. It will help if you cross-verify the gold rates before buying the gold.
  • GST rate on gold: The GST rate of any precious/semi-precious stones on gold jewelry is different from gold. You must ensure that these charges are separately mentioned in the bill. Under the GST, a tax of 3% on gold value and 5% making charges are levied on the gold jewelry. The sellers may also include labor charges in the form of making changes. You must thus negotiate with jewelers to reduce this cost.

Effects of GST on Gold

Presently, the organized gold sector in India comprises 30%; however, it is believed the high rates of gold will shift the vendors to move to the illegal gold sector and import gold illegally. Further, the gold industry has been affected in the following manner with the implementation of GST.

  • Impact of GST on gold value: GST has soared the gold prices for the final consumers. It is because earlier 2% tax (1% service tax and 1% VAT) was charged on the gold. However, the GST tax slab rate for gold value is 3%.
  • Impact of GST on gold imports: With the implementation of GST, the illegal smuggling of gold imports has significantly increased especially from the middle east. It is because the import or custom duty of 10% is levied on the gold prices along with the GST of 3%, thus hiking the customs duty on gold imports.

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