GST On Purchase of Gold Jewellery
Here’s a quick guide on GST on Gold, GST on the purchase of gold jewellery, Gold GST rate, GST on making charges, GST on import of gold, etc.
Friends, today we are going to discuss GST on Gold in this article. As we all know, after the implementation of Goods and Services Taxes (GST), GST is levied on the purchase and sale of gold and other precious metals. The rate of GST on gold is currently 3%.
India is a huge market in the world for buying and selling gold. We Indians consider gold to be a very auspicious metal. In every worship, in marriage, and in any auspicious occasion, we buy gold or present it to others as a gift.
So let us see how much and how GST is levied on the purchase and sale of gold. In this article, we will discuss the GST on the purchase of gold, and gold jewellery in great detail.
This article will act as a guide for you. Whenever you purchase gold and any gold jewelry, you will already know how much GST you will have to pay for it.
Calculation of GST on Gold
Calculation of GST on gold can be a bit complicated as the tax is applicable not only on the value of the gold but also on the making charges, if any. Making charges are the charges that a jeweller charges for the labor involved in making the jewellery.
For example, suppose you purchase a gold necklace worth Rs. 100,000 and the making charges are Rs. 10,000. In that case, the total value of the necklace will be Rs. 110,000, and the GST applicable will be 3% of Rs. 110,000, which comes to Rs. 3300.
What is the Impact of GST On Gold?
With the introduction of GST, the value of Gold has increased by approximately 1%. Before the GST implementation, Gold was taxed at 2% (1% as VAT + 1% as Service Tax).
Thus, after GST on gold at 3% has increased the price for end consumers (buyers). Here it is to be noted that, in addition to the above 3%, 5% GST is separately charged on making charges of jewellery.
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How much is the GST On Gold Jewellery?
- GST will be levied at 3% on the value of gold and the making charges.
- The making charges applicable to the jewellery will be taxed separately under GST at 5%.
GST on Making Charges of Gold
GST at the rate of 5% is applicable on making charges of gold jewellery. It can be in the form of a fixed percentage on the value of gold or a fixed charge.
Thus, making charges vary from one jeweler to another. It may depend on the ornament’s design also.
GST Rate on Gold Jewellery in 2023
The rate of GST on gold is applicable in 2023 for end consumers (buyers).
| GST On Gold Value | 3% |
| GST on making charges of gold jewelry | 5% |
| GST on Gold Import | 10% Custom Duty |
GST On Gold Sent To Job Worker
Now, let’s see the impact of GST on gold being sent to Job workers for any Job work.
If the job worker is registered under GST. He will have to pay GST at 5% on the job work charges only. And the jewelry manufacturer can take input credit (ITC) of the GST paid on job work charges.
He can use this credit of GST for the payment of GST on the outward supply of manufactured jewellery.
However, in the case of non-registered job workers. The jewellery manufacturer will have to pay GST on RCM (Reverse charge mechanism) basis.
The manufacturer can claim and utilize the Input Tax Credit (ITC) of the tax paid under the reverse charge mechanism.
Become GST compliant dealer. Ensure GST compliance such as filing GST returns on time, maintaining proper records, and paying GST dues correctly to avoid any legal issues. Apply online for GST Return filings.
GST on Gold Import
GST on gold imports from outside India attracts customs duty@10%. If a GST-registered person imports gold from outside India, a customs duty at the rate of 10% is payable.
This cost is passed on to the end consumer in the form of GST. GST@3% is charged from consumers on the value of gold including customs duty.
Important things before Buying Gold Jewellery
If you are planning to purchase gold in India, here are some important tips or buying guides to consider:
- Purity: Always check the purity of the gold before purchasing. The purity of gold is measured in carats, and 24-carat gold is considered to be the purest form of gold. Therefore, it is advisable to purchase gold with a higher carat value.
- Hallmark: Look for a hallmark sign on the gold jewelry you are purchasing. The hallmark sign indicates that the jewellery is certified for purity and authenticity by the Bureau of Indian Standards (BIS).
- Making charges: The making charges of the jewelry can vary from one jeweler to another. Therefore, it is advisable to compare the making charges of different jewelers before making a purchase.
- Buyback policy: Check the buyback policy of the jeweller. A good jeweller should have a transparent buyback policy, which allows you to sell your gold jewellery back to them at a fair price.
- Market rate: Keep an eye on the current market rate of gold before buying. The market rate can fluctuate daily, and purchasing gold at a high market rate may not be beneficial in the long run.
- Safety: Always ensure the safety of your gold jewellery. It is advisable to keep your gold jewelry in a safe and secure place such as a Bank locker and safe.
- Invoice: Always ask for an invoice that includes the details of the gold jewellery you are purchasing. An invoice or GST bill is an official record of your gold purchase. It will provide you assurance of purity and act as support /proof in any taxation-related inquiries. Purchasing gold jewellery without a proper bill also promotes illegal trade activities.
Why should you take an invoice when you buy gold?
This is the most important thing when buying gold. Always ask for an invoice (GST invoice) that includes the details of the gold jewellery you are purchasing, such as the gold value, weight, carat value, making charges, tax amount, and total cost.
An invoice is a legal document that provides proof of purchase. Having an invoice can be useful in case of any dispute or discrepancy.
An invoice is necessary for tax purposes also. It will act as support /proof in any taxation-related inquiries. In case of theft or loss of jewellery, an invoice can be useful to claim insurance. Purchasing gold jewellery without a proper bill also promotes illegal trade activities, so, we should avoid it.
Therefore, it is advisable to take an invoice for gold jewellery purchases. Ensure that the invoice contains all the necessary details and keep it safe for future reference.