Gold in India is much more than just a commodity; it is a symbol of security, a centerpiece of celebrations, and a trusted family heirloom. However, the final price you pay at the jewelry store is influenced by a complex mix of international market rates and domestic taxes. With the rollout of GST 2.0 in late 2025 and significant changes to import duties in the 2025 Union Budget, the way we calculate the cost of gold has shifted. Understanding how these taxes from the 3% GST on the metal to the 5% on craftsmanship interact is essential for any smart buyer looking to get the best value during the wedding or festive seasons.

The Core GST Rates on Gold for 2025-26

Under the current GST regime, the tax on gold is split into two distinct parts: the value of the physical metal and the service of turning that metal into jewelry.

Component

GST Rate

Applicable On

Gold Value

The actual weight and purity (24K, 22K, 18K) of the gold.

Making Charges

The labor or job work cost of designing the jewelry.

Digital Gold

Gold bought through apps or digital vaults.

Gold Repairs

Polishing or repairing old gold ornaments.

Important Update: While GST 2.0 (effective September 22, 2025) overhauled many tax slabs across India, the GST Council decided to keep the 3% rate on gold stable to ensure predictability for consumers and the bullion market.

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The Hidden Hero: Import Duty Reductions

While the GST rate stayed the same in 2025, the actual price of gold was heavily impacted by the Union Budget 2025. To curb smuggling and help the domestic industry, the government maintained a significantly lower import duty structure.

Basic Customs Duty (BCD): 5%
Agriculture Infrastructure & Development Cess (AIDC): 1%
Total Effective Import Tax: 6% (Down from 15% in early 2024).

This 9% reduction in import duty has acted as a cushion, helping to offset the rising global prices of gold and making it more affordable for Indian households.

How to calculate the Final Price: A Real-Life Example

When you receive a bill from a jeweler, the GST isn't just one single line item. Here is how a typical 10-gram 22K gold chain would be priced in 2026:

Assumptions:

Gold Rate (10g): ₹75,000
Making Charges (10%): ₹7,500

Step

Particulars

Calculation

Amount

Value of Gold

10g x ₹7,500

₹75,000

Making Charges

10% of Gold Value

₹7,500

GST on Gold (3%)

3% of ₹75,000

₹2,250

GST on Making (5%)

5% of ₹7,500

₹375

Total

Final Invoice Price

(1+2+3+4)

₹85,125

Impact of GST on the Gold Industry

The transition to a unified GST system has brought about several changes in how we buy gold:

Transparency: You no longer pay different VAT rates (which vary by state). Whether you buy in Mumbai or Chennai, the 3% GST remains uniform.
Organized Market: GST has pushed more jewelers to become registered, meaning you are more likely to get a proper invoice and hallmarked gold, which protects you from being cheated on purity.
Old Gold Exchange: One major benefit for consumers is that if you exchange old gold for new jewelry, no GST is charged on the value of the old gold. You only pay GST on the extra gold you buy and the making charges for the new design.

GST on Gold Investments (ETFs and Bonds)

For those who treat gold strictly as an investment and don't want to worry about lockers or theft, paper gold is a great alternative.

Sovereign Gold Bonds (SGB): These are exempt from GST. There is no tax when you buy them, and if held until maturity (8 years), the capital gains are also tax-free.
Gold ETFs & Mutual Funds: There is no GST on the purchase of these units. However, you will pay an 18% GST on the brokerage fee or management fee charged by the fund house.

Pro-Tips for Gold Buyers in 2026

Ask for the Split: Always ensure your bill shows the gold value and make charges separately. Since the GST rates are different (3% vs 5%), a combined 5% tax on the whole bill is wrong and costs you more.
Check Hallmarking: Since 2021, HUID (Hallmark Unique Identification) is mandatory. The GST you pay is only worth it if the purity is guaranteed.
Digital Gold Conversion: If you convert your digital gold into physical coins, be prepared to pay the 5% making charges and additional delivery GST at that time.

Conclusion

The GST regime has turned gold buying into a more professional and transparent experience in India. By keeping the rate at 3% and slashing import duties to 6%, the government has tried to balance its revenue needs with the average Indian's love for the yellow metal. As long as you insist on a proper GST invoice and understand the split between the metal's price and the artist's labor, you can invest in gold with complete peace of mind.

Frequently Asked Questions (FAQs)

What is the current GST rate on gold jewelry in 2025-26?

The rate is 3% on the value of the gold and 5% on the making (labor) charges.19

Do I have to pay GST if I sell my old gold?

No, If an individual sells old gold to a jeweler, it is not considered a supply under GST, so no tax is applicable. However, if the jeweler sells that old gold further, they pay GST on their profit margin.

Is GST applicable on gold coins and bars?

Yes, a flat 3% GST is applicable on gold coins and bars, just like jewelry.20 However, since making charges are minimal, the overall tax is lower.

Can I claim Input Tax Credit (ITC) on my gold purchase?

Individual consumers cannot claim ITC.21 Only registered businesses (like jewelry manufacturers or traders) can claim credit for the GST they pay on raw gold used for business purposes.22

Is GST higher for 24K gold compared to 22K?

No. The percentage (3%) is the same for all purities (18K, 22K, or 24K).23 The total tax amount only changes because the base price of 24K gold is higher.

Does the New Tax Regime affect GST on gold?

No. The New Tax Regime refers to Income Tax slabs. GST is an indirect tax and remains the same regardless of which income tax slab you choose.

Is there GST on Sovereign Gold Bonds?

No, SGBs are exempt from GST, making them one of the most tax-efficient ways to invest in gold.24

What happens if my jeweler doesn't provide a GST bill?

A non-GST bill means you have no legal proof of the purchase. This can make it difficult to sell the gold later or claim insurance if it is lost or stolen.

Why are making charges taxed at 5% while gold is 3%?

Gold is classified as a good, while making charges are classified as a service (job work). The GST Council set these different rates to reflect the labor involved in crafting jewelry.25

Is GST applicable on gold won in a contest or gift?

Gifts from relatives (as defined by the IT Act) are generally tax-free. However, if you win gold in a contest, you may have to pay Income Tax (30%) on the value, but the organizer usually handles the GST part during the purchase.

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