Learn about 2025 GST on gold detailed rates for jewellery, imports, and digital gold with Vakilsearch to educate yourself on tax compliance and maximize savings.
GST on gold contributes significantly to the cost of gold purchases in India. As of 2025, a 3% GST rate is levied on the value of gold, while a 5% GST rate applies to charges for jewellery. Additionally, gold imports are subject to customs duties and IGST, which result in increased costs for consumers and businesses.
Since gold is a traditional asset as well as a popular investment, understanding how GST is calculated on gold jewellery, gold ornaments, and digital gold can assist buyers and sellers in staying compliant and managing costs effectively. In this article, you will find information regarding the gold gst in 2025 that you need to know.
Understanding GST on Gold
It is a 3% tax applied to the value of gold and an additional 5% tax on the price of jewellery. It was introduced under India’s GST framework, replacing earlier taxes such as VAT and excise duty, thereby simplifying gold transactions between buyers and sellers.
Jewellery Sector Seeks Tax Relief in Budget 2025
In the upcoming Union Budget 2025, the jewellery industry is requesting that GST rates be revised and gold monetisation measures be enhanced. To encourage compliance and make gold more affordable, stakeholders, including Malabar Gold & Diamonds and GJC, are advocating a 1% GST on gold.
Demands:
- Reduced GST Rates: A cut from 3% to 1% to ease the burden on consumers.
- Improved Gold Monetisation Scheme: Involve reputed jewellers to encourage participation.
- Access to Finance: Simplify financing norms for jewellers.
Industry leaders highlight that reducing taxation would boost consumer demand, drive formalisation, and help the sector grow from $80 billion (FY24) to $145 billion by FY28.
GST Rates on Gold
Taxes on gold in India vary based on transaction type. Here’s how it works:
- GST on gold value: GST is applied to all gold purchases, regardless of purity (22-carat, 24-carat, or 18-carat).
- GST on Making Charges: 5% GST is added to gold jewellery making charges.
- GST on imported gold: Gold imported into India attracts 12.5% customs duty and 3% IGST on assessable value (gold price + customs duty).
As an example,
- Gold Value: ₹50,000
- Making Charges: ₹5,000
- GST on Gold (3%): ₹50,000 x 3% = ₹1,500
- GST on Making Charges (5%): ₹5,000 x 5% = ₹250
Total GST Payable: ₹1,500 (on gold) + ₹250 (on making charges) = ₹1,750. Tax planning for gold purchases and investments is simplified by this rate structure.
Did You Know?
When the GST on gold was introduced on July 1, 2017, India became one of the first major gold-consuming countries to implement a unified tax system for gold. The 3% GST rate was carefully chosen to strike a balance between generating government revenue and discouraging tax evasion. Before GST, the tax structure on gold varied across states, with VAT ranging between 1% and 1.5% and excise duty at 1%, leading to non-uniform pricing and compliance challenges. Interestingly, industry lobbying during GST discussions resulted in the gold rate being capped at 3%, lower than the standard GST rate of 5% for most goods, reflecting the cultural and economic importance of gold in India.
GST on Purchases of Physical Gold
Regardless of its form (bars, coins, or jewellery), GST on gold purchases in India are subject to 3% (1.5% CGST + 1.5% SGST). An additional 5% GST is imposed on the making charges for gold jewellery. These taxes have replaced earlier levies such as VAT and service tax, resulting in a uniform taxation system.
For example, if you buy gold worth ₹1,00,000 with ₹10,000 in making charges, you’ll pay ₹3,000 (3%) as GST on gold value and ₹500 (5%) as GST on making charges, bringing the total to ₹1,13,500.
Both buyers and businesses must understand these rates, as they directly impact the final price of physical gold.
GST on Gold Jewellery Making Charges
In the case of gold jewellery, the making charges are subject to a 5% GST under the GST framework. These making charges are used to cover the cost of the craftsmanship and labor involved in creating the jewelry.
For instance, if the making charges for your jewellery amount to ₹5,000, the GST on making charges would be ₹5,000 x 5% = ₹250. This amount is added to the total cost of the jewellery, along with the 3% GST on the value of gold.
It is important for buyers to be aware of these additional charges when planning gold jewellery purchases. The government streamlined taxation by introducing GST on making charges, ensuring consistency throughout India. To ensure transparency, always inquire with your jeweller if making charges are itemized separately.
GST on Digital Gold
Digital gold, another popular investment option, is also subject to 3% GST, just like physical gold. GST is applied to the transaction value at the time of purchase for digital gold. Unlike physical gold, digital gold does not involve making charges, so there is no additional GST imposed.
For example, if you purchase digital gold worth ₹50,000, the GST will be ₹50,000 x 3% = ₹1,500, bringing the total cost to ₹51,500. Investors should also be aware that when selling digital gold, any capital gains are subject to income tax as per applicable rates, adding an additional layer of compliance.
Step by Step Guide to GST Calculation
To calculate the total cost of gold, including GST, follow these steps:
Step 1: Determine the Gold Value
Start with the market price of gold for the weight and purity you want to purchase. For example, 10 grams of 22-carat gold = ₹50,000.
Step 2: Add Making Charges
The cost of crafting jewellery is charged by jewelers.
Let’s assume making charges = ₹5,000.
Step 3: Calculate GST on Gold Value (3%)
GST on the gold value is 3% of ₹50,000: ₹50,000 x 3% = ₹1,500
Step 4: Calculate GST for Making Charges (5%)
GST on making charges is 5% of ₹5,000: ₹5,000 x 5% = ₹250
Step 5: Add Everything
Add the gold value, making charges, and their respective GST amounts:
Total Price = ₹50,000 (Gold) + ₹5,000 (Making Charges) + ₹1,500 (GST on Gold) + ₹250 (GST on Making Charges) Final Cost = ₹56,750.
You can calculate your total gold jewellery purchase cost, including GST, by following this simple steps mentioned above.
Calculation:
| Step | Particulars | Calculation | Amount (₹) |
| 1 | Gold Price (10 grams, 22-carat) | Given | ₹50,000 |
| 2 | Making Charges (10% of gold price) | ₹50,000 x 10% | ₹5,000 |
| 3 | GST on Gold Value (3%) | ₹50,000 x 3% | ₹1,500 |
| 4 | GST on Making Charges (5%) | ₹5,000 x 5% | ₹250 |
| 5 | Total Cost | Gold + Making Charges + GST | ₹56,750 |
Impact of GST on Gold Prices
In 2017, the GST replaced earlier taxes such as VAT, excise duty, and service tax with a unified 3% GST on gold value and 5% GST on making charges.
Before GST: Gold buyers paid around 2% VAT and 1% excise duty, resulting in non-uniform pricing and tax evasion.
After GST: In comparison to pre-GST times, buyers now pay an additional 0.5%-1% in taxes compared to pre-GST days, but the 3% GST made pricing transparent and uniform nationwide. Although GST affected gold buyers, it simplified tax compliance for businesses and encouraged fair trade practices.
Input Tax Credit for Gold Purchases
When gold is used for further production, resale, or business purposes, businesses registered under GST can claim Input Tax Credits (ITCs). Gold purchases made for personal use are not eligible for ITC. Buyers must have valid tax invoices and comply with GST regulations in order to claim ITCs.
Consideration Before Investing in Gold
- Be aware of GST Rates: Remember, gold attracts 3% GST on its value and 5% on making charges for jewellery. Factor these taxes into your budget.
- Choose Between Physical or Digital Gold: With digital gold, you avoid making charges and only pay 3% GST.
Check Purity and Certification: Opt for BIS hallmarked gold to ensure authenticity and resale value. - Invoice Transparency: For clarity and compliance, always insist on a detailed invoice showing the gold price, making charges, and GST separately.
- Monitor Market Prices: To offset GST expenses, buy gold during dips.
- ITC Eligibility: To reduce costs, claim an Input Tax Credit when buying gold for business purposes.
Consider these points when investing in gold to minimize unnecessary costs.
Conclusion
GST on gold affects everyone—whether you’re buying jewellery, investing in digital gold, or running a gold business. A 3% GST is charged on gold value, and 5% GST on making charges for jewellery, which adds to the total cost.
Knowing these GST rates and how GST is calculated helps you plan your purchases better. For businesses, staying compliant with GST rules and using benefits like input tax credit can save money. As gold remains a popular investment in India, understanding GST is important for making smart and cost-effective decisions. Stay informed, calculate carefully, and make the most of your gold investments! To compute GST on gold jewellery, you need the advice of experts such as Vakilsearch Indeed.
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What is the GST rate for gold jewellery?
The GST rate for gold jewellery is 3% on the gold value and an additional 5% on the making charges.
How do I avoid GST on gold jewellery?
GST cannot be avoided on gold jewellery purchases as it is a mandatory tax. However, you can minimize costs by negotiating lower making charges, which attract a 5% GST.
Why is there 3% GST on gold?
The 3% GST on gold replaces previous taxes like VAT, excise duty, and service tax, streamlining taxation and ensuring a uniform system across India.
Is gold GST exempt?
No, gold is not GST-exempt. A 3% GST is applied to gold purchases, and an additional 5% GST is charged on jewellery making charges.
Does gold have 12% GST?
No, gold does not have 12% GST. The GST rate on gold is 3%, and 5% applies only to the making charges for jewellery.
