# How Much GST is Applied to 22 Carat Gold in India

Learn about the impact of GST on 22 carat gold in India.
Gold loan
2 min
28 May 2024

A significant portion of gold in India is imported from other countries. This imported gold attracts a customs duty of 12.5%, which is comprised of a basic customs duty of 10.5% and a 2.5% Agriculture Infrastructure and Development Cess (AIDC). Additionally, Social Welfare Cess and GST are also applicable at the time of import. These taxes and duties are subject to periodic updates by the government.

Before the implementation of GST, the customs duty on gold was around 10%. Currently, for example, if gold is worth Rs. 50,000 is imported into India, a customs duty of Rs. 6,250 is payable on the transaction. This higher duty impacts the overall cost of gold in the market, contributing to its price.

## How to calculate GST on gold jewellery?

Calculating GST on gold jewellery involves understanding the applicable GST rate and the value of the jewellery. As of now, the GST rate on gold jewellery is 3%. Here's how you can calculate it:

1. Determine the value: Calculate the total value of the gold jewellery, which includes the cost of gold, making charges, and any other costs.
2. Apply GST rate: Multiply the total value by the GST rate (3%). For example, if the total value of the jewellery is Rs. 50,000, the GST would be calculated as follows:
GST=Total Value×GST Rate
GST=50,000×0.03=1,500GST=50,000×0.03=1,500
3. Add GST to the value: Add the calculated GST to the total value of the jewellery to get the final price.

Therefore, if you are buying gold jewellery worth Rs. 50,000, the GST amount would be Rs. 1,500, making the final price Rs. 51,500. Always ensure to check the latest GST rates and any additional charges applicable.

## Example of GST on gold calculation

Here is a summary of the current GST rates and other taxes on gold in India:

 Type of Transaction Tax Rate Import of gold 12.5% customs duty on the value of gold imported Gold jewellery making charges 5% GST on making charges GST on gold 3% on the value of gold purchased

## Sample calculation for gold jewellery purchase

Below is a sample calculation of taxes and GST on a gold jewellery purchase in India:

1. Base price of gold imported: Rs. 50,000\
2. Customs duty (12.5% of Base Price): Rs. 6,250
3. GST on gold (3% of Base Price + Customs Duty): Rs. 1,688
4. Making charges (10% of Total so far): Rs. 5,794
5. GST on making charges (5% of Making Charges): Rs. 290
6. Total price of gold jewellery purchase: Rs. 64,022

So, for gold jewellery with a base price of Rs. 50,000, the total cost, including all taxes and GST, would be Rs. 64,022.

## GST on gold exemptions

In India, certain exemptions and reductions in GST apply to gold under specific circumstances to provide relief and support for particular sectors. One key exemption is for the supply of gold to the Reserve Bank of India (RBI) and for the refining of gold doré bars. Gold doré, a semi-pure alloy of gold and silver, enjoys a lower customs duty rate, which subsequently reduces the GST burden when refined and sold in the market.

Additionally, small-scale artisans and jewellers with an annual turnover below a certain threshold are eligible for GST exemption, allowing them to sell gold jewellery without charging GST to customers. This exemption helps support small businesses and traditional goldsmiths, making gold more affordable for local buyers.

Furthermore, charitable trusts and religious institutions may be exempt from GST on donations of gold, promoting donations and preserving cultural practices. These exemptions aim to balance revenue collection with economic support for specific groups and activities.

## Things to consider before buying 22 carat gold ornaments

Before buying 22 carat gold ornaments, consider the following factors to ensure you make a well-informed purchase:

1. Purity: 22 carat gold is 91.6% pure gold mixed with other metals for durability. Verify the purity through hallmark certification, ensuring the gold meets the BIS (Bureau of Indian Standards) standards.
2. Price: Gold prices fluctuate daily. Check the current market rates and compare prices across different jewellers to get the best deal.
3. Making charges: Jewellers charge making fees for crafting the ornaments, which can vary significantly. Negotiate these charges or look for fixed-rate making charges to save money.
4. Design and weight: Choose designs that suit your preferences and consider the weight of the ornaments, as heavier pieces will cost more.
5. Buyback policy: Check the jeweller's buyback or exchange policy. A good buyback policy ensures you can sell or exchange your ornaments in the future without significant loss.
6. Reputation of the seller: Purchase from reputable jewellers known for their quality and authenticity to avoid counterfeit products.

## Impact of GST on 22 carat gold rates

The implementation of the Goods and Services Tax (GST) in India has had a notable impact on 22-carat gold rates. Under GST, gold attracts a 3% tax on its value, which has slightly increased the overall cost for consumers. Additionally, a 5% GST on making charges for gold jewellery adds to the expense.

Before GST, various state taxes and excise duties applied to gold, leading to a complex and inconsistent tax structure across India. GST has streamlined this, creating a uniform tax rate, which simplifies the buying process and reduces the scope for tax evasion.

While the immediate effect of GST was a marginal increase in gold prices, the transparency and consistency it brought have benefited the market. Consumers now have clearer pricing, and the organised sector has gained more trust. Overall, GST's impact on 22-carat gold rates has been to create a more predictable and transparent market, though with a slight increase in prices.

The implementation of the Goods and Services Tax (GST) in India has had a notable impact on 22-carat gold rates. Under GST, gold attracts a 3% tax on its value, which has slightly increased the overall cost for consumers. Additionally, a 5% GST on making charges for gold jewellery adds to the expense.

Before GST, various state taxes and excise duties applied to gold, leading to a complex and inconsistent tax structure across India. GST has streamlined this, creating a uniform tax rate, simplifying the buying process, and reducing the scope for tax evasion.

While the immediate effect of GST was a marginal increase in gold prices, the transparency and consistency it brought have benefited the market. Consumers now have clearer pricing, and the organised sector has gained more trust.

For those in need of quick access to funds, gold loans have become an attractive option in this GST-regulated environment. By leveraging gold assets, individuals can secure loans without selling their jewellery, thus managing financial needs while retaining their gold. This adds flexibility and financial security, making gold a versatile and valuable asset in the post-GST landscape.

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