GST on gold in India is 3% of the value of gold. A 5% GST applies to making charges when billed separately. This applies to gold jewellery, coins, and bars. The rates remained unchanged after the September 2025 GST 2.0 reforms. The GST Council kept gold outside the broader 5%, 18%, and 40% rate restructuring.
Before GST, gold was taxed through state VAT, excise duty, and other levies. These taxes varied by region. GST replaced them with a uniform tax structure across India.
Key Takeaways
- Raw gold (bars, bullion, coins) attracts 3% GST, applied uniformly across India regardless of purity (18K, 22K, 24K).
- Making charges on gold jewellery attract 5% GST, not 18%. The government set the rate at 18% when GST launched in 2017. It reduced the rate to 5% years ago, and the September 2025 reform left it unchanged.
- No compensation cess applies to gold or making charges.
- Gold ETFs and Sovereign Gold Bonds do not attract GST on the investment itself. However, brokerage and fund management fees attract 18% GST separately.
- Under the second-hand goods scheme, a jeweller typically pays GST only on the margin when reselling old jewellery, not on its full value.
- Jewelers must register for GST once turnover crosses ₹40 lakh (₹20 lakh for special category states), and can claim Input Tax Credit (ITC) on eligible purchases.
What is GST on Gold in India?
Raw gold, including gold bars, bullion, and coins, attracts 3% GST. For intra-state sales, this includes 1.5% CGST and 1.5% SGST. For inter-state sales, it applies as 3% IGST. The 3% rate applies to gold in its unprocessed form. This includes gold purchased for investment or as a manufacturing input for jewellery.
Note: No making charges apply to raw gold bars or coins. They do not involve labour or design components.
What is GST on Gold Jewelry?
Gold jewellery attracts two separate GST rates on two separate components:
- 3% GST on the gold value itself.
- 5% GST on making charges, the labour, design, and craftsmanship cost, when shown as a separate line item on the invoice.
This means buying gold jewellery involves paying for both the metal and the craftsmanship, taxed separately and at different rates.
Calculating GST on a Gold Purchase
Calculating GST on a gold purchase requires breaking the bill into its two taxable components:
- Determine the gold price based on current market rates for the weight purchased.
- Identify making charges, typically billed as a percentage of the gold value or a flat labour fee.
- Apply the correct rate to each component, 3% GST on the gold value, 5% GST on making charges.
Example Calculation
Buying a gold necklace:
- Gold price for 10 grams = ₹50,000
- Making charges (10%) = ₹5,000
- GST on gold = 3% of ₹50,000 = ₹1,500
- GST on making charges = 5% of ₹5,000 = ₹250
- Total GST payable = ₹1,750
Total cost = ₹50,000 (gold) + ₹5,000 (making charges) + ₹1,750 (GST) = ₹56,750.
Tip: You can use RegisterKaro’s GST Calculator to calculate the GST amount, taxable value, and total invoice value accurately.
GST Compliance for Gold Traders and Jewelers
Gold traders and jewelers must follow key GST rules for registration, invoicing, and return filing. These requirements help ensure accurate tax reporting and ITC claims.
- GST registration: Jewelers must register for GST when annual turnover exceeds ₹40 lakh, or ₹20 lakh in special category states. Registration allows them to collect GST and claim eligible Input Tax Credit (ITC).
- Invoicing: GST-compliant invoices must separately show:
- Gold value, taxed at 3%.
- Making charges, taxed at 5%.
- GST charged on each component.
- GST returns: Jewelers and gold traders must file GST returns monthly or quarterly. These returns cover sales, purchases, and GST collected and paid. Late filing can lead to penalties and ITC issues.
Can Jewelers Claim Input Tax Credit (ITC) on GST?
GST-registered jewelers can claim ITC on the GST paid on raw gold purchases and making charge inputs, offsetting it against the tax collected on sales. This prevents double taxation and ensures tax applies only to the value added at each stage.
Conditions for claiming ITC:
- Proper GST-compliant invoices and records must be maintained.
- Timely, accurate GST filing is required to reflect ITC claims correctly.
- ITC applies separately to the 3% paid on gold and the 5% paid on making charges.
How Does GST Impact Gold Investment?
GST affects gold investments differently depending on the type of investment. Physical and digital gold are subject to GST, while financial products such as Gold ETFs and SGBs are treated differently.
The following points explain how GST applies to different gold investment options:
- Gold ETFs and Sovereign Gold Bonds (SGBs): These do not attract GST on the investment itself. They are treated as financial securities rather than physical goods. Fund management or brokerage fees are taxed separately at 18%.
- Digital gold: Digital gold attracts 3% GST at purchase. This is similar to physical gold.
- Resale of old jewellery: Selling old gold jewellery to a jeweler for resale is typically taxed only on the jeweler’s profit margin. This falls under the second-hand goods margin scheme rather than being fully GST-exempt.
