GST on Gold: Latest Rates on 18, 22, 24 Carat, HSN Codes, and Impact on Buyers!

With the introduction of GST 2.0, two tax structures of 5% and 18% have been rolled out to ensure tax relief. Also, a 40% GST rate is applied on luxury as well as Sin products. Though India’s tax ecosystem is undergoing a fresh wave of transformation, GST on gold continues to maintain consistency.

Gold stays at 3% GST rate where, 1.5% is CGST and 1.5% is SGST.  Makings are charged at 5% GST rate, where 2.5% is CGST and 2.5% is SGST. Whether you are planning to buy gold just as a festive ornament or as a long-term investment, this blog is a must-read.

​In this blog, we will find the latest GST percentage on gold, HSN codes, and how it impacts buyers. Let’s scroll down to see more in detail. 

GST on Gold: Current Rates on 22 & 24 Carat, Digital Gold, and Investment Schemes! 

We find gold available in 22 as well as 24 Carat, and Digital gold too. Let’s see the rates of GST on Gold in India below.   

24-carat Gold 

GST rate on gold for 24 carats is levied at 3%, which continues to stay for all the categories of gold available in pure form. Doesn’t matter if it is gold bars, coins, or ornaments- GST rates remain uniform. 

22-carat Gold

GST on 22-carat gold is also set at 3%. This includes GST on gold jewellery, bars, and coins falling under 22-carat. 

Digital Gold

3% GST is applicable on purchasing digital gold. 

Gold Investment Schemes 

Gold investment policies such as Gold ETFs, Bonds, and mutual funds are exempted from GST on gold in India. However, 18% GST is levied on the service, management, and other fees applied to the policies. 

GST on Gold: Rates and HSN Codes! 

HSN codes	Gold Product Categories	GST Rate
7108	Gold (including gold bars and ingots)	3%
7113	Articles of jewellery and parts thereof (including gold jewellery)	3%
7114	Other articles of gold (excluding jewellery and parts)	3%

How is GST Calculated on Gold? 

The jewellery shops follow a varied invoicing pattern due to the fluctuating gold rates. This results in a difference in the billing system between the jewellers. 

Here’s the formula to compute the GST percentage on gold. 

1. Calculate GST on Raw Gold: 

To calculate GST on gold bars or coins, the making charges don’t apply. So, here’s the formula to compute goods and services tax: 

Total Price = Gold Rate per gram x Total gold bar purchased 

GST Rate applied on Gold Bar = 3% 

Total GST Amount = Total price x (3/100) 

Calculating GST on Gold Bar: Example 

Consider, You have bought 20 grams of gold at a rate of ₹6,000 per gram. Here’s how the formula works. 

Amount of Gold Purchased = 20g

Rate Per Gram= ₹6,000

Total Value = 20 x 6,000 = ₹1,20,000 

GST Rate applied = 3% 

Total GST Rate = 1,20,000 x (3/100) = ₹3,600 

Total Value to be paid =  ₹1,20,000 +  ₹3,600 = ₹1,23,600

2. Calculate GST on Gold Jewellery: 

For gold ornaments, making charges are also considered. So, here’s the formula to compute GST on gold Jewellery. 

GST on Gold = 3% 

GST on Gold Making Charges = 5% 

Total GST = GST on Gold  + GST on making 

Calculating GST on Gold Jewellery: Example 

Let’s consider that we purchase a 10g gold chain at a rate of ₹6,000 per gram. Also, the making charges are  ₹500/ gram.  Here’s how to compute. 

Amount of Gold Jewellery = 10g

Rate Per Gram = ₹6,000

Total Value of Jewellery = 10 x 6,000 = ₹60,000

GST rate on gold = 60,000 x (3/100) =  ₹1,800

Total Making Charges = 500 x 10g =  ₹5000 

GST on Making = 5000 x (5/100) = 250

Total GST applied = 1800 + 250 =  ₹2050

Total Jewellery price = 2050 + 60,000 + 5000 = ₹67,050 

What is the Impact of GST on Gold Jewellery? 

1. GST impacts the overall pricing of gold bars as well as jewelry and influences the buying decisions of the customers.
2. GST ensures that the gold traders and jewellers are following the tax requirements and regulations.
3. GST impacts the cost structure of the gold industry, influencing purchasing, pricing, investment, etc.
4. GST standardizes the tax rates on gold and integrates transparency in the documentation process.

Can ITC be Claimed on GST Applied for Gold? 

Jewellers or gold merchants can claim Input Tax Credit (ITC) for the GST applied on raw gold or the making charges incurred. Even if the reverse charge mechanism is used to pay the tax, ITC can be claimed. 

What is the GST on Gold Exemptions: Import & Export! 

Exports: In the 31st council meeting, Goods and Services Tax  was exempted on the supply of gold done by a registered entity. These exemptions were announced to minimize the tax burden on the exporters and push the Indian gold sector in the International market. 

Imports: Importing gold in India is levied with Basic Custom Duty of 5% and Agricultural infrastructure and development Cess (AIDC) of 1%. Also, Imports attract an additional 3% IGST applied on the value of gold and custom duty. 

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Let’s conclude

Gold has always found roots in ancient India, and gold jewelry holds a special place even today in our households. With GST 2.0, there’s no change in the tax structure, where 3% GST on gold bars and 5% is applied on making charges.

As the gold market continues to rise, knowing the GST percentage on gold, calculations, HSN codes, and exemptions becomes crucial to make purchasing or investment decisions. The blog gives you GST rates for all forms of gold, so bookmark this article right away and refer to it before making a gold purchase. 

FAQs of GST on Gold

1. What is GST rate on Gold? 

Goods and services tax imposed while purchasing gold, which is paid by the buyers, is GST on Gold. This includes rates on gold bars, biscuits, making charges, and importing. 

2. How much GST on Gold Bars is Applied? 

3% GST is applied on Gold Bars. 

3. Why did tax rates on gold remain steady even after GST 2.0? 

GST 2.0 has introduced only two tax structures, which are 5% and 18%, while 40% is for Sin or luxury items. GST rate on gold in India is 3%; it’s not just a luxury but also a cultural investment. Increasing GST rates on gold will increase its pricing too, leading to inflation in the economy. Thus, GST rates were kept the same as they were before. 

4. Can we avoid GST on gold in India? 

In India, purchasing gold without GST is not possible and reflects a violation of compliance norms. Also, buying gold without paying GST is considered illegal. 

5. What is the applied GST rate on Gold Import and Export? 

Gold exports are exempted from GST, while imports attract 3% IGST on gold. 

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