GST on Gold in India
Gold in India has been termed as both an investment and a rich part of its culture. Whether in jewellery, in the physical form of coins and bars, or in digital form; knowledge about applicable GST (Goods and Services Tax) is crucial as this ultimately affects the total purchase prices.
To date, gold carries a 3% GST, and gold jewellery attracts an additional 5% GST on making charges.
Let us now see how this classification plays out when studying manufacturers and the actual charges levied.
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GST Rate on Gold in India
The charge applicable on gold is 3% on the total value of gold.
Out of this 3%:
- 1.5% CGST (Central GST)
- 1.5% SGST (State GST)
(Applicable for intra-state transactions)
For inter-state transactions, a 3% IGST is imposed.
This 3% rate is applied uniformly across:
- Gold jewellery
- Gold bars
- Gold coins
- Digital gold
The rate does not vary based on purity (24K, 22K, etc.).
GST on Gold Jewellery
Gold jewellery attracts:
- 3% GST on the intrinsic value of gold
- 5% GST on the making charges
Making charges may vary depending on:
- Complexity of design
- Brand value
- Type of ornaments
Due to the additional 5% GST on making charges and related pricing factors, jewellery becomes more expensive compared to gold bars or coins.
GST on Various Gold Forms
1. Gold Coins
- 3% GST
- Regular selling discourse
- Minimal or no additional GST on making
- Popular for gifting and small investments
2. Gold Bars
- 3% GST
- Typically purchased for long-term investment
- Popular for investment purposes
3. Gold Jewellery
- Gold Value: 3% GST
- Making Charges: 5% GST
4. Digital Gold
Gold can be bought electronically while physical gold is securely held by the platform.
- 3% GST applies
5. Sovereign Gold Bonds (SGBs)
- Issued by Government of India through RBI
- No GST is payable on purchase
6. Gold ETFs
- Financial products traded on stock exchanges
- No GST applicable on purchase or sale
- Brokerage and securities transaction charges may apply
SGBs and Gold ETFs are considered tax-efficient forms of investment since they do not involve GST on purchase.
Impact of GST on Gold Prices
Before GST (prior to 2017):
- Gold was subject to 1% VAT
- 1% excise duty was applicable
After GST implementation:
- Effective tax became 3%
- This increased the tax component compared to the earlier structure
At the same time, GST simplified the tax regime by eliminating multiple cascading taxes.
GST Non-Compliance by Jewellers and Traders – Penalties
Jewellers and traders are required to:
- Register under GST if turnover exceeds threshold
- Issue proper tax invoices
- Deposit collected GST on time
Failure to comply attracts penalties.
Examples of GST Penalties
Offense
Penalty
Late/Delayed Filing
₹20/day (nil return) / ₹50/day (others), max ₹10,000
Wrong ITC Claim
100% of wrongly claimed credit or ₹10,000 (whichever higher)
Not Registering Under GST
₹10,000 or 100% of tax due (whichever higher)
Supplying Without Invoice
Tax evaded or ₹10,000 (whichever higher)
Not Filing GST
10% of tax due or ₹10,000 (whichever higher)
Some Tips to Buy Gold
- Look for purity in karat (24K, 22K, etc.)
- Prefer BIS hallmarked gold for authenticity
- Understand making charges before purchasing jewellery
- Compare gold prices across cities
- For wealth creation, consider ETFs or SGBs
Conclusion
Gold continues to be a preference for most Indians for investment and cultural reasons. Gold is subject to 3% GST, while jewellery attracts an additional 5% GST on making charges.
If gold is purchased purely for investment purposes, Gold ETFs and Sovereign Gold Bonds may be more tax-efficient options as they do not attract GST on purchase.
By understanding GST implications, buyers can plan their purchases better and avoid surprises at billing.