All you need to know about GST on Gold Loan interest

Learn all about GST on gold loans—whether it applies to interest, the current GST rate, and how it affects your total repayment amount.
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All you need to know about GST on Gold Loan interest
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2 min read
06 May 2025

Everything you need to know about gold loan in India

Taking a loan is a common way to handle financial emergencies. There are different types of loans available, such as personal loans, home loans, education loans, and even gold loans, which are popular in countries like India where gold is a big investment market.

In India, people often buy gold for special occasions to bring luck and prosperity to their homes. Some also buy gold as an investment. Because of this, gold loans have become popular because they are easily accessible and can be used in emergencies.

While you may be familiar with the basic requirements for getting a loan backed by gold, there are other important things to consider it is a good investment. Keep reading to learn about interest rates, GST on gold loan interest, and other important aspects.

Gold loan interest rate

The gold loan interest rate represents the cost of borrowing against your gold jewellery. With Bajaj Finance, you can avail of a gold loan at interest rates starting at 9.50% per annum, ensuring a cost-effective and flexible solution to meet your financial needs.

A gold loan can be a valuable financial tool in times of need. However, it is essential to consider certain factors that can impact your borrowing experience.

  • Market conditions: Fluctuations in market demand can impact interest rates as well as the value of the gold loan per gram.
  • Gold rates: The market rate of gold also affects the interest rates on gold loans, as they directly impact the value of the gold jewellery offered as collateral.
  • Repayment frequency: The frequency of the interest payments on your gold loan also impacts the interest rate.

If you are considering a gold loan from Bajaj Finance, there are online tools to assist you throughout the application process. One of these is the free ​​online Gold Loan Calculator.

You can use the calculator to determine the loan amount you can avail of and calculate the interest that will be applicable. Simply input the necessary information, such as the weight of the gold you intend to pledge or the desired loan amount, and the calculator will provide you with accurate and relevant details. It is a quick and easy way to access the information you need to make informed decisions about your gold loan.

How GST affects gold loan interest and charges

The goods and services tax (GST) is an indirect tax applied to goods and services across India, including certain gold loan charges. While GST does not apply to the gold loan interest itself, it is included in the processing fee. This means when you see the processing fee, it already reflects the total cost with GST—there is no need to pay it separately. This transparent approach helps borrowers understand the complete cost of their gold loan upfront.

If you are planning to apply, Bajaj Finserv Gold Loan offers a convenient process with minimal requirements.

Key points to remember:

  • GST is charged only on the gold loan processing fee, not on the gold loan interest.

  • The processing fee shown already includes GST for better transparency.

  • Indian citizens aged 21–70 years are eligible for Bajaj Finserv Gold Loan.

  • Only one KYC document is required (Aadhaar card, voter ID, passport, driving licence, NREGA job card, or national population registration letter).

For any questions about charges or documents, Bajaj Finance is ready to assist you.

How to calculate GST on your gold loan

Calculating GST on your gold loan is simple once you understand where it applies. While GST does not apply to the gold loan interest, it is levied on the processing fees and some service charges. The current GST rate on such services is 18%. By knowing the processing fee amount, you can easily estimate the GST using a basic formula or online GST calculator. This helps you understand the total cost of borrowing and plan your repayment effectively.

Steps to calculate GST on your gold loan:

  1. Check your processing fee:
    Find out the processing fee charged on your gold loan. For example, if the processing fee is ₹1,000, note this amount.

  2. Apply the GST rate:
    Multiply the processing fee by 18% (0.18).
    Example: ₹1,000 × 0.18 = ₹180 GST.

  3. Calculate the total cost:
    Add the GST to your processing fee to get the final amount.
    Example: ₹1,000 + ₹180 = ₹1,180 total processing cost.

Understanding GST on your gold loan ensures transparency and helps you avoid surprises when managing your loan costs.

How to apply for a gold loan

There are two convenient ways to apply. You can either visit a nearby Bajaj Finance branch or apply online through their website by following a few simple steps. Here is how:

  1. Click on ‘APPLY’ to open our online application form

  2. Enter your 10-digit mobile number and click on ‘GET OTP’

  3. Submit the OTP to verify your identity

  4. Select your state and city to find the branch nearest to you

  5. Enter your full name and date of birth as per your PAN

  6. Set up your appointment at our branch

Once you have submitted your application, a representative from Bajaj Finserv will reach out to guide you through the next steps. With more than 800 branches located throughout India, Bajaj Finance ensures a quick and convenient loan processing experience.

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

Does the 18% GST apply to the entire gold loan amount?

No, the 18% GST is only applicable to specific services such as processing fees and other service charges, not on the entire loan amount or the principal.

Can I claim GST input credit on gold loan charges?

No, GST input credit on gold loan charges cannot be claimed by individuals. It is available only to registered businesses, not for personal loans.

What is the GST rate on gold loans in India?

The GST rate on gold loan-related services in India is 18%. This applies to charges like processing fees, valuation fees, and other service charges, but not to the principal or interest.

Is GST applicable to gold loan interest?

No, GST is not applied to gold loan interest. The interest amount remains exempt from GST, with the tax only applying to processing and service fees.

Do all banks and NBFCs apply the same GST on gold loans?

Yes, all banks and NBFCs follow the same 18% GST rate on gold loan services, as per government regulations, although service charges may differ between lenders.

What other charges on gold loans are subject to GST?

Apart from the processing fees, GST is applicable to valuation fees, foreclosure charges, and sometimes renewal charges, depending on the lender's policies and service terms. It is advised to check the lender policies and charges before applying.

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