GST subsumed VAT, service tax, excise duty and several other indirect taxes charged on domestic transactions. Tax on the making charges on gold jewellery was introduced under GST. On the other hand, basic customs duty continues to be collected on the import of gold from other countries and the levy of IGST.
| Type of Custom Duty/ Rates | Gold Bar and Findings | Gold Dore | ||
| Old | New | Old | New | |
| Basic Custom Duty (BCD) | 10% | 5% | 10.35% | 5.35% |
| Agriculture Infrastructure and Development Cess (AIDC) | 5% | 1% | 4.35% | 0.35% |
| Total | 15% | 6% | 14.5% | 5.5% |
What is GST on Gold?
Gold bars or gold jewellery fall within the definition of ‘Goods’ as per the GST law. Under Section 7 of the CGST Act, the supply of gold (without any job work) is considered the supply of goods. GST for gold is as follows-
| Particulars | HSN Code | GST Rate |
| (1) Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set (2) Ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport (includes synthetic or reconstructed stones, apart from unworked or simply sawn or roughly shaped) | 7103, 7104 | 0.25% |
| Diamond, gold, pearls, silver, or articles of jewellery of silver or gold, and so on, including synthetic or reconstructed stones, unworked or simply sawn or roughly shaped | 7101, 7102, 7106, 7107, 7108, 7109, 7111, 7113, 7114, 7116, 7118 | 3% |
| Job work in relation to cut and polished diamonds, plain or studded jewellery of gold, silver and so on | 9988 | 1.5% |
HSN Code for Gold & Jewellery- HSN Chapter 71
Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder fall are classified under HSN code 7108 as under:
- HSN code for gold powder is 7108 11 00.
- HSN code for other unwrought forms of gold is 7108 12 00.
- HSN code for other semi-manufactured forms of gold is 7108 13 00
- HSN code for monetary gold is 7108 20 00
- HSN code for gold base metals or silver, clad with gold, not further worked than semi-manufactured is 7109 00 00
GST rate of 3% is applicable for all of the above HSN codes.
Jewellery of precious metals or of metal clad with precious metals fall under HSN code 7113 as under:
- HSN code for jewellery with filigree work is 7113 11 10
- HSN code for jewellery studded with gems is 7113 11 20
- HSN code for other articles of jewellery is 7113 11 30
- HSN code for gold jewellery, unstudded is 7113 19 10
- HSN code for gold jewellery set with pearls is 7113 19 20
- HSN code for gold jewellery set with diamonds is 7113 19 30
- HSN code for gold jewellery set with other precious and semi-precious stones is 7113 19 40
All of the above types of gold jewellery with the above HSN codes attract 3% GST rate.
Gold Coin falls under HSN Code 7118 and attracts a 3% GST rate.
Imitation jewellery fall under HSN code 7117 as under:
- HSN code for imitation jewellery of base metal, whether or not plated with precious metals is 7117 11 90.
- HSN code for imitation jewellery in the form of bangles is 7117 19 10.
- HSN code for jewellery studded with imitation pearls or imitation or synthetic stones is 7117 90 10.
GST rates on gold purchase and GST on gold making
As per Section 8 of the CGST Act, selling gold ornaments or jewellery to the common man is a composite supply of goods and services. The gold used is considered goods and making charges or value addition is towards job work. Since the principal supply is the sale of gold, the GST rate of 3% shall be levied instead of 5% on the total value of jewellery, whether or not making charges is shown separately. The CBIC has clarified this in its sectoral FAQs on what is the GST on gold, including GST on gold rate.
The GST registration threshold limits that commonly apply to normal taxpayers apply to businesses in gold mining and distribution as well. Further, the composition scheme under section 10 of the CGST Act is available to businesses selling gold.
Many gold merchants or sellers or jewellers take the services of goldsmiths and specialists who carry out job work on the gold bars or gold biscuits supplied by them to make jewellery. It is considered a supply of service. The goldsmiths will charge for their service known as making charges which will attract GST of 5%. If these goldsmiths or specialists are not registered under GST, the gold merchant or jeweller must pay GST at 5% on a reverse charge basis.
Consumers who approach the goldsmiths by themselves will also have to pay 5% GST if the goldsmith is registered under GST.
GST is not charged if unregistered individuals sell gold jewellery or exchange gold ornaments to buy new ones at jewellery shops. It is not considered furtherance of business and is out of the scope of supply under GST. However, if dealers or gold companies such as Attica Gold company, Aashraya Gold Company or Manappuram Gold Loan, etc. purchase and sell second-hand gold jewellery, GST applies on the value of such gold calculated as per the rule 32(5) of CGST Rules, after satisfying the conditions.
Repair works on jewellery will be considered the making charges for which GST is charged separately at 5%.
GST Calculation on Gold
To set the context, when calculating GST on gold jewellery, GST on gold ornaments, GST on gold coin, GST on gold biscuit, GST on gold bar or GST on gold purchase, price includes the cost of extracting and processing the gold, and the profit margin, but does not include making charges. However, the price of gold jewellery additionally involves making charges. Up to 30th June 2017, taxes such as VAT and service tax were levied on its price. Thereafter, it was replaced by GST.
Let us take an example of the import of gold jewellery and compare its prices under pre-GST and the GST regime, and know what is pre-GST and GST for gold as follows:
| Particulars | Before GST (₹) | Under GST (Not as a composite supply) (₹) | Under GST (As a composite supply) (₹) |
| Base price of 10 gm gold (Assumed) | 1,00,000 | 1,00,000 | 1,00,000 |
| Add: Customs duty (6%) | 6,000 | 6,000* | 6,000* |
| Assessable value for service tax | 1,06,000 | 1,06,000 | 1,06,000 |
| Add: Service tax (1%) | 1,060 | Nil | Nil |
| Assessable value for VAT | 1,07,060 | 1,06,000 | 1,06,000 |
| Add: VAT ( 1%**) | 1,071 | Nil | Nil |
| Assessable value for GST | 1,08,131 | 1,06,000 | 1,06,000 |
| Add: GST on gold at 3% | Nil | 3,180 | — |
| Total value of gold | 1,08,131 | 1,09,180 | 1,06,000 |
| Add: Making charges at 5%^ (On base price+customs duty) | 5,300 | 5,300 | 5,300 |
| Assessable value for GST | 1,13,431 | 1,14,480 | 1,11,300 |
| Add: GST on making charges at 5% | Nil | 265 | — |
| Add: GST on gold jewellery at 3%^^ (For composite supply) | — | — | 3,339 |
| Total value of gold jewellery | 1,13,431 | 1,14,745 | 1,14,639 |
FAQs
How much GST on gold?
The GST on gold is charged at a rate lower than most of the goods and services. The rate of GST for gold in India or GST for gold coins is 3%. This rate is charged as a total of CGST and SGST (which is 1.5% each) or just the IGST rate of 3% depending on whether the sale is intrastate or interstate respectively. Further, GST on gold making charges by jewellers is 5% as total rate and computed on the price.