How does GST work on Gold Jewellery

Gold jewellery has long been a symbol of wealth and tradition, and it continues to be one of the most prized possessions in many households. After the introduction of GST (Goods and Services Tax) in India. The taxation on gold jewellery has had significant changes. Understanding how GST works on gold jewellery is important for consumers, jewellers and investors.

Earlier than the implementation of GST in July 2017, gold was taxed under distinct categories including VAT, excise duty, and customs duty. With GST, the taxation structure becomes streamlined, ensuring uniformity across the nation.

Pre-GST vs. Post-GST Taxation on Gold

GST has provided transparency and uniformity to gold taxation, benefiting both buyers and clients, despite a minor increase in charges

GST (Goods and Services Tax) on Gold in India is applied to different groups:

• For Consumers   

Tax on Gold Value: A 3% GST is changed on the price of the gold used in the jewellery, this is applicable whether the jewellery is made of pure gold, gold alloys, or embellished with precious stones.

For Example: If the cost of gold is ₹90,000 Then the GST on Gold will be calculated as per the category of GST Norms which is 3%. Which is the same for 18K, 22K and 24K.

Therefore,                  

 Tax on Making Charges: Making charges, the cost of making and crafting the gold into jewellery, attract an additional 5% GST. This applies whether making charges are charged separately or included in the total price.

For Example: If the making Charge is ₹ 5,000. Then the GST will be calculated on the same for all the 18K,22K and 24K accordingly.

Therefore,             

So, the Total GST charged to the Consumer will be                     

Exemptions: If a Consumer sells old Gold and uses the proceeds to buy new jewellery, then the Consumer doesn’t have to pay GST.

• For Jeweller

 Under the (Goods and Services Tax) GST for Jewellers in India are subject to regulations and rates:

1.  Uncooked Gold Articles which are purchased by Jewellers are taxed at 3% GST
2. The jeweller can claim ITC (Input Tax Credit) on GST paid for Gold.
3. This technique serves to lower the overall tax burden on jewellers and avoid double taxation.
4. Old jewellery exchanged by customers is not considered a supply under GST, so no tax is levied on such transactions.
5. The central GST (CGST) and state GST (SGST) components of the 3% GST rate apply to gold bars. The rates for SGST and CGST are both 1.5%.

• For Investor

Demand for Gold as an investment has increased in the early years and among the many options to invest in gold, Digital Gold is gaining popularity. Digital Gold is a product sold online that enables one to retain gold without needing a safe or bank locker.

GST on Investor for Digital Gold as:

An investor has to pay 3%GST when purchasing Digital gold for expenses such as the cost of storage, insurance and trustee fees.

• For Importer

• Conclusion

The introduction of GST on gold jewellery has streamlined the taxation process, ensuring transparency and uniformity across India. While consumers face a 3% GST on gold value and 5% on making charges, jewellers benefit from an input tax credit, reducing their tax burden. Overall, GST has simplified the gold market, benefiting all stakeholders.