Impact of GST on Gold Price, Jewellery, Coins and Bar in India

Buying gold in 2026? Learn how 3% GST affects gold prices, jewellery making charges, current gold rates, and what your final bill includes.
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4 min read
22 April 2025

Gold has always been important in India. It is not just something to buy and sell, but a sign of wealth, a popular way to save money, and a key part of our culture. On 22 September 2025, the GST 2.0 system was introduced, bringing more clarity and new rules to the gold industry. Now, in February 2026, it is important for both buyers and investors to understand how these taxes affect the final price of gold.

In this guide, we explain how GST impacts gold, how it affects different parts of the economy, and why the recent changes in tax rules are an important step forward for the jewellery industry.

New GST rate on gold

At the 56th GST Council meeting held on 22 September 2025, the government introduced GST 2.0. The aim was to simplify the tax system by reducing multiple GST slabs into fewer, clearer rates. While GST on many luxury items was increased to 40%, the Council decided to keep the GST rate on gold at 3%. This decision was taken to avoid an increase in gold smuggling and to protect the savings of ordinary people.

Below is a summary of GST rates on gold and related items before and after 22 September 2025:

Item Category

Rate Before 22 Sept 2025

New Rate (from 22 Sept 2025)

Key Impact

Raw Gold (Bars/Coins)

3%

3%

No change to keep prices stable

Gold Jewellery (Gold Value)

3%

3%

Continued support during wedding and festive seasons

Making Charges (Job Work)

5%

5%

Helps protect local craftsmen and artisans

Imitation Jewellery

3%

3%

Still treated under the precious metals category

Repair Charges

5%

5%

Same fixed rate for all jewellery repair services
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4 ways GST affects gold jewellery

The move to a single tax system has changed how people buy gold. Below are four key ways GST affects gold jewellery that every buyer should understand:

  1. Clear and Uniform Pricing
    Before GST, gold was taxed using different VAT rates and duties that varied from state to state. Now, a single GST rate of 3% applies across India. This means the tax on gold is the same whether you buy it in Delhi, Mumbai, or Chennai.

  2. Separate Tax on Gold and Making Charges
    Under GST, gold and jewellery-making services are taxed separately. The gold value is taxed at 3%, while the making charges are taxed at 5%. This makes your bill more detailed and easier to understand.

  3. Better Protection Through Hallmarking
    GST supports mandatory HSN codes and hallmarking rules. These measures make it difficult for unorganised sellers to deal in non-certified gold, helping protect buyers from purity and quality issues.

  4. Encouragement for Digital Gold
    GST applies to digital gold in the same way as physical gold. However, since digital gold does not involve making charges at the time of purchase, the overall tax payable is usually lower than when buying gold jewellery.

Current gold rates in February 2026

Knowing the tax is important, but the base price of gold matters just as much. After the Union Budget 2026, gold prices have been quite unstable due to changes in customs duties aimed at controlling global inflation.

As of 3 February 2026, below are the gold prices across major Indian cities:

Purity Level

Price per Gram (INR)

Price per 10 Grams (INR)

24K Gold (99.9% Pure)

Rs. 15,175

Rs. 1,51,750

22K Gold (91.6% Pure)

Rs. 13,910

Rs. 1,39,100

18K Gold (75.0% Pure)

Rs. 11,381

Rs. 1,13,810


Note: These prices are for reference only. GST and making charges are not included, and prices may vary slightly depending on local market conditions.

How is GST calculated on gold?

When you visit a jewellery shop, the final price is not just “gold price plus tax”. It is made up of several parts, and the break-up is important. If you use a GST calculator, you will see that each part is taxed differently. Let’s understand this with an example of a 10-gram 22K gold chain in 2026.

The calculation works like this:

  1. Value of Gold – Weight of the jewellery multiplied by the daily gold rate.

  2. Making Charges – Usually between 8% and 15% of the gold value.

  3. GST on Gold (3%) – Charged only on the value of the gold.

  4. GST on Making Charges (5%) – Charged only on the labour or craftsmanship cost.

Note: Always ask for a detailed or “split” bill. A transparent jeweller will clearly show the 3% GST on gold and the 5% GST on making charges separately. If a jeweller charges a flat 3% on the total amount (including making charges), it may slightly reduce the tax you pay, but as per GST rules, gold and making charges should normally be billed separately.

Why did the government keep GST on gold at 3%?

You may wonder why gold was kept at 3% GST when the government was trying to simplify most tax rates to 5% and 18%. There are a few important reasons:

  • To Prevent Smuggling
    India is one of the largest consumers of gold in the world. If GST on gold was increased to 5% or 18%, it would encourage more illegal or “grey market” gold to enter the country.
  • Because of Its Cultural Importance
    For many families, especially in rural India, gold is a major way to save money. A sudden increase in tax would reduce the value of these savings for millions of households.
  • To Support the Organised Jewellery Sector
    By keeping GST at a reasonable level, the government encourages buyers to purchase gold from GST-registered, hallmarked jewellery shops instead of unorganised local sellers

Impact of GST on different types of gold investment

1. Digital Gold
Buying gold through mobile apps has become a popular choice, especially among younger investors. Digital gold is charged at the same 3% GST as physical gold. The main benefit is that you do not pay any making charges unless you later convert it into physical coins or jewellery.

2. Sovereign Gold Bonds (SGBs)
As of 2026, Sovereign Gold Bonds continue to be the most tax-efficient way to invest in gold.

  • GST: 0%. Since SGBs are issued by the Reserve Bank of India, no GST is charged.
  • Making Charges: None.
  • Interest: You also earn around 2.5% interest per year in addition to the gold price movement.

3. Exchanging Old Gold
Here is a useful tip that can help you save money. When you exchange old gold jewellery for new jewellery, GST is not charged on the value of the old gold. Under current rules, if you give your old jewellery to a jeweller to melt and remake, you only pay GST on the making charges and on any extra gold added to the new piece.

Sector-wise impact of GST on gold

GST does not affect everyone in the same way. During the 2025–26 financial period, some groups have benefited more than others, while others have faced challenges.

1. Consumers
For everyday buyers, the main impact of GST is the cost. With gold prices crossing ₹1.5 lakh per 10 grams and a 3% GST added, even small purchases involve a noticeable tax amount. However, buyers benefit from better resale value, as a GST-compliant bill acts as proper proof of purity and source.

2. Retailers and Jewellers
GST has pushed many small, family-run jewellery shops to move towards digital billing and proper records. Larger brands such as Tanishq and Malabar Gold have adjusted more easily. They can use Input Tax Credit (ITC) to reduce the GST paid on making charges, which helps lower their overall operating costs.

3. Artisans and Job Workers
The effect of GST on making charges is most visible in this group. Independent artisans working for larger showrooms now fall under the 5% GST rate. While this was challenging at first, the ability of manufacturers to claim tax credit on these charges has helped create a more organised and transparent supply chain.

4. Investors (Digital Gold and Bonds)
Many investors are now choosing Sovereign Gold Bonds and Gold ETFs. SGBs are the only gold investment that does not attract the 3% GST. Digital gold platforms, however, must charge GST at the time of purchase, which can reduce returns for short-term investors.

Impact of GST on making charges for gold jewellery

Making charges are often the most confusing part of a jewellery bill. Under current GST rules, the process of making jewellery is treated as a service (also called job work), not just the sale of gold.

  • Different Tax Rates
    The gold itself is taxed at 3%, while the making or workmanship charges are taxed at 5%.
  • Separate Billing
    If a jeweller gives a single combined bill, they may end up charging 3% GST on the full amount. However, most jewellery shops now issue split bills that clearly show GST on gold and GST on making charges separately, as required by the rules.
  • Support for Artisans
    To help local karigars (artisans), the GST Council has kept the tax on making charges at 5%. This is much lower than the 18% GST charged on most other professional services.

Conclusion

The impact of GST on gold in 2026 is all about balance. While rising gold prices mean buyers need to spend more, the uniform GST system has brought a level of transparency that was missing ten years ago. Whether you are purchasing gold for a wedding or investing to protect against inflation, the 3% GST on gold and 5% GST on making charges are now established parts of the Indian tax system.

For those working in the gold business—retailers, manufacturers, or investors—managing cash flow is more important than ever. With gold prices at record levels, even small changes in inventory can put pressure on working capital.

Bajaj Finserv Business Loans are designed to help manage this challenge by offering clear business loan interest rates and quick access to funds:

  • Higher Loan Limits: Borrow up to ₹80 lakh to prepare for peak wedding-season demand.
  • Support for Artisans: Use dedicated funding to pay job workers and manage the 5% GST on making charges more smoothly.
  • Fast Disbursal: Receive funds in as little as 48 hours* after your business loan eligibility is approved, helping you act quickly when gold prices fall.

To plan your finances better, you can also use a business loan EMI calculator to estimate monthly repayments and choose a loan tenure that matches your cash flow.

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Frequently asked questions

Can we get GST refund on gold jewellery?

Yes, under certain circumstances, GST refunds can be claimed on gold jewellery. For example, if the jewellery is exported or if it is purchased for a specific purpose like exports or manufacturing.

How can I avoid GST on gold jewellery?

Avoiding GST on gold jewellery in India is not legal. It is a mandatory tax. However, you can consider buying gold from a jeweller who is authorised to sell under the GST composition scheme, which has a lower tax rate.

Is there a separate GST for jewellery making charges?

Yes. Under Indian GST rules, making or craftsmanship charges are treated as a service and attract 5% GST, separate from the 3% GST on the gold itself. Most jewellers issue a split bill showing GST on gold and GST on making charges for transparency and compliance.

Did the GST on gold change during the GST reforms 2.0?

No. During GST 2.0 reforms introduced on 22 September 2025, many luxury goods saw tax changes, but gold retained its 3% GST on metal. This was done to curb smuggling, protect consumer savings, and encourage purchases from hallmarked, GST-compliant jewellery outlets.

How do I calculate GST if I exchange my old gold for new jewellery?

When exchanging old gold, GST is charged only on the making charges and any additional gold added. The “seed gold” you provide is exempt. A split bill from the jeweller will show 5% GST on labour and 3% GST on extra gold, keeping the exchange tax-efficient.

Does the 3% GST apply to imitation or gold-plated jewellery?

Imitation or gold-plated jewellery generally falls under non-precious metals and is not taxed at 3%. GST depends on the material and design: imitation jewellery usually attracts 3% GST, but items not containing real gold are classified differently, so buyers should confirm the rate with the jeweller.