The Standard GST Rate on Gold
In India, the Goods and Services Tax (GST) on gold and gold jewellery is unified at a flat 3%. This rate applies to the total value of the gold, which includes the cost of the raw gold itself. This replaced the older complex structure of Excise Duty and VAT, bringing uniformity across all states.
The Confusion Around Making Charges
One of the most confusing aspects for consumers is the GST on making charges. While the gold itself attracts a 3% GST, the making charges (the labor cost of crafting the jewellery) are technically a service. According to GST laws, job work on gold attracts a 5% GST. However, when a jeweller sells a finished piece of jewellery to an end consumer, it is treated as a composite supply, and the 3% rate is applied to the grand total (Gold Value + Making Charges).
Calculation Example
Suppose you buy a gold chain weighing 10 grams. If the gold rate is ₹6,000 per gram, the gold value is ₹60,000. If the making charge is 10% (₹6,000), the total taxable value is ₹66,000. The 3% GST will be calculated on ₹66,000, which comes to ₹1,980. The final billing amount will be ₹67,980.
Old Gold Exchange and GST
A common scenario in Indian households is exchanging old jewellery for new. If a customer brings old gold worth ₹40,000 and buys new gold worth ₹1,00,000, how is GST applied? GST is levied only on the net value paid by the customer. However, the interpretation varies slightly based on whether the old gold is considered an unregistered purchase. Generally, the consumer pays 3% on the gross value of the new item.
Input Tax Credit (ITC) for Jewellers
For shop owners, managing GST involves claiming Input Tax Credit (ITC). When a jeweller buys raw gold from a bullion dealer or uses a karigar (artisan) for job work, they pay GST. They can set off these paid taxes against the GST collected from customers. Proper billing software is absolutely essential here to segregate B2B and B2C sales, manage HSN codes, and file GSTR-1 and GSTR-3B accurately every month.