GST on Gold: How To Calculate GST on Gold and Gold Jewellery?
In India, the GST concept was introduced in July 2017. A GST charge will typically differ from stage to stage, such as from manufacturing to the final product. Therefore, GST on gold is subject to two factors: jewellery production and availability. Simultaneously, when buying a new gold product and selling your old gold jewellery, you will not have to pay the GST. In other words, if you exchange new gold for older gold, you will be able to save your GST.
Gold GST Rates
Before GST was implemented, you needed to pay 1.2 percent GST and 1 percent excise duty along with the customs duty. It was great that the making charges you paid were not subject to any additional GST on gold. You will still have to pay a tax of 3 percent if you are disposing of old gold jewellery or exchanging it for new jewellery. Before and after implementing GST, both advantages and disadvantages were present.
- The GST on jewellery is only 3 % when gold is used to make it.
- The making charges you pay will be subject to a GST rate of 5%.
- The GST of 10 % customs duty will be charged if the gold is imported.
Gold GST calculation
A range of factors determine gold jewellery prices and GST tax payment, including gold rates based on purity, making costs, gold weight, and GST (Goods and Services Tax). For jewellery shops, the following formula is used to establish gold jewellery rates and considers the GST tax payment. Calculating GST on gold is as follows:
Gold Jewellery Price = Gold Weight * Gold Rate + Making Charges + GST (Making Charges +Jewellery Price)
Here’s an example of the formula to help you understand it better. Think about the price of one gram being Rs. 4000, and GST on making charges being 10%.
| Gold details | Without GST | With GST | |
| Gold rates | 25 gms | Rs. 100000 | Rs. 100000 |
| Custom duty | 10% | Rs. 10000 | Rs. 10000 |
| Service tax | 1% | Rs. 1,100 | NA |
| GST | 3% | NA | Rs. 3300 |
| VAT | 1.2% | Rs. 1333.20 | NA |
| Applicable price | Rs. 112433.20 | Rs. 113300 |
GST calculation on gold jewellery
The GST rate on gold jewellery can be calculated using the following formula. Consider an example where the price of a gram of gold is set at Rs. 4000 and GST on making charges is 10%, and compare the gold rate with GST.
| Gold details | Without GST | With GST | |
| Gold rates | 25 gms | Rs. 100000 | Rs. 100000 |
| Custom duty | 10% | Rs. 10000 | Rs. 10000 |
| Service tax | 1% | Rs. 1,100 | NA |
| GST | 3% | NA | Rs. 3300 |
| VAT | 1.2% | Rs. 1333.20 | NA |
| Making charges | 10% | Rs. 11000 | Rs. 11000 |
| Making charges GST | 5% | NA | Rs. 550 |
| Total price | Rs. 123433.20 | Rs. 124850 |
Some tips to remember
Gold ornaments are subject to a different GST rate than raw gold, and so you must be aware of this. However, you should be aware that the GST on gold jewellery is different from the GST on stones.
Both of these should be noted separately with GST charges. You can calculate GST quite easily if you understand the different types of taxes that you will have to pay when you buy raw gold, that is, gold from its raw form to its final packaging.
At the 31st GST council meeting, a few exemptions were announced. Licensees of the notified individuals can export jewellery with an exemption. This exemption has been provided to ensure that India’s gold sector remains competitive globally. Activities in the gold jewellery market will remain when the burden of GST is reduced.