With the introduction of the Goods and Services Tax (GST), the tax structure on gold in India has undergone major changes. At present, a uniform 3% GST is applicable on both 24 carat and 22 carat gold, impacting the cost of physical gold purchases. The implementation of GST has brought clarity and uniformity to gold taxation across the country. This article outlines the applicable GST rates on gold and explains how GST is charged when purchasing gold.
Key Takeaways
- The GST rate on gold purchases (24k, 22k, jewellery, coins, and bars) is 3% on the value of gold.
- Customs duty on imported gold has been substantially reduced, lowering the total import duty from nearly 15% to around 6%.
- Digital gold purchases attract 3% GST, while Gold ETFs, Sovereign Gold Bonds, and gold mutual funds are not taxed on the gold value itself; GST at 18% applies only to related service or management fees.
- Jewellers are eligible to claim input tax credit (ITC) on gold purchases and job-work charges. However, ITC is not permitted on gold coins given as promotional gifts or sales incentives.
- For second-hand gold purchased from unregistered individuals, GST is payable only on the profit margin under the margin scheme, and ITC is not available under this method.
GST Rates on Gold in India
Gold in India is commonly available in 24 carat and 22 carat purity. The applicable GST rates are as follows:
24 Carat Gold GST Rate in India
GST on 24 carat physical gold is 3%. This rate applies uniformly to pure gold in all forms, including gold bars, gold coins, and jewellery.
22 Carat Gold GST Rate in India
GST on 22 carat physical gold is also 3%. The tax is levied on the gold value contained in 22-carat jewellery, bars, or coins.
GST on Digital Gold
The purchase of digital gold attracts 3% GST, similar to physical gold.
GST on Gold Investment Schemes
Gold investment options such as Gold ETFs, Sovereign Gold Bonds, and Gold Mutual Funds are not subject to GST on the gold value. However, GST is applicable on service charges, management fees, or other related costs, which are taxed at 18%. Investors should factor in these charges while investing in such schemes.
Import of Gold
In the Union Budget 2024, the Finance Minister announced a reduction in customs duty on the import of gold by 9%. Following this announcement, the revised duty rates were officially notified by the CBIC.
| Type of Customs Duty / Rates | Gold Bar & Findings | Gold Dore | ||
| Old | New | Old | New | |
| Basic Customs Duty (BCD) | 10% | 5% | 10% | 5% |
| Agriculture Infrastructure and Development Cess (AIDC) | 5% | 1% | 4.35% | 0.35% |
| Total Duty | 15% | 6% | 14.35% | 5.35% |
GST on Gold – HSN Codes
| HSN Code | Product Description | GST Rate |
| 7108 | Gold, including bars and ingots | 3% |
| 7113 | Articles of jewellery and parts thereof, including gold jewellery | 3% |
| 7114 | Other articles of gold (excluding jewellery and its parts) | 3% |
GST Calculation on Gold
The example below shows a comparison of gold pricing before GST and under the GST system:
| Particulars | Before GST (₹) | Under GST (₹) |
| Base price of 10 gm gold (assumed) | 1,00,000 | 1,00,000 |
| Add: Service tax (1%) | 1,000 | Nil |
| Assessable value for VAT | 1,01,000 | 1,00,000 |
| Add: VAT (1%**) | 1,010 | Nil |
| Assessable value for GST | – | 1,00,000 |
| Add: GST @ 3% | Nil | 3,000 |
| Total value of gold | 1,02,010 | 1,03,000 |
**VAT assumed at 1%; actual rate may differ across States/UTs.
Availability of Input Tax Credit (ITC) on Gold Business
Jewellers and gold traders are allowed to claim Input Tax Credit on GST paid for raw materials such as gold and on job-work charges. Even when tax is paid under the reverse charge mechanism for supplies received from an unregistered job worker, the ITC of such tax paid can be claimed by the gold merchant.
Important Advance Rulings on GST on Gold
Karnataka AAR – M/s Attica Gold Pvt. Limited
Order No. KAR/ADRG/15/2020 dated 23 March 2020
Issue:
The applicant company purchases gold from unregistered individuals and releases pledged gold at prevailing market prices. In cases involving second-hand gold with no change in form or quality, the following questions were raised:
- Valuation: Whether GST should be charged only on the difference between the selling price and purchase price as per Rule 32(5) of the CGST Rules.
- ITC Claim: Whether ITC can be claimed when purchases are made under the margin scheme.
Ruling:
- Valuation: GST is payable only on the positive margin (selling price minus purchase price) when the invoice is raised for second-hand goods without any change in form. If the purchase price exceeds the selling price, no GST is applicable. Non-availment of ITC is a mandatory condition.
- ITC Claim: If second-hand gold jewellery is purchased from a registered person, ITC is available. However, in such cases, the margin scheme cannot be applied on subsequent sales.
Maharashtra AAR – M/s Biostadt India Limited
Order No. GST-ARA-72/2018-19/B-165 dated 20 December 2018
Issue:
The applicant introduced a sales promotion scheme offering gold coins to customers upon meeting certain purchase and payment conditions. The issues considered were:
- ITC on Gold Coins: Whether ITC can be claimed on gold coins procured for sales promotion.
- ITC on Similar Schemes: Whether ITC is available for other similar promotional schemes.
Ruling:
- ITC on Gold Coins: ITC is not allowed, as the distribution of gold coins is not part of the applicant’s principal business. Further, Section 17(5) of the CGST Act blocks ITC on goods disposed of as gifts, and the gold coins distributed under the scheme qualify as gifts.
- ITC on Similar Schemes: ITC is also not admissible for any similar promotional schemes.
FAQs on GST on Gold in India
How much GST is charged on hallmarked gold?
GST on hallmarked gold is 3% on the gold value, while making charges attract 5% GST.
What is the GST rate on digital gold?
Digital gold attracts 3% GST, similar to physical gold. This GST is levied on the gold value, including expenses like storage cost, insurance premium, and trustee fees.
Can individuals claim GST paid on gold?
Only GST-registered individuals or businesses engaged in selling gold jewellery can claim input tax credit (ITC). Personal buyers cannot claim GST paid on gold purchases.
Is GST applicable when exchanging old gold jewellery for new jewellery?
No GST is charged on the value of old gold exchanged. However, GST applies to the net amount payable, including the value of additional gold and making charges.
Is GST applicable on gold imports in India?
Yes, 3% IGST is applicable on gold imports. In addition, basic customs duty and social welfare surcharge are also levied, increasing the total landed cost.
How can GST on gold be reduced or avoided?
GST cannot be fully avoided. However, when you exchange old gold for new jewellery, GST is charged only on the difference value, not on the old gold.
Is the GST rate on gold the same across India?
Yes, GST on gold is uniform across India at 3%, irrespective of the state or city.
Is there GST on gold making charges?
Yes, 5% GST is charged on gold making charges, separate from the 3% GST on gold value.
What is the GST rate on 24 carat gold?
The GST rate on 24 carat gold is 3%.
What is the GST rate on 22 carat gold?
GST on 22 carat gold is also 3%. For example, on ₹1,000 worth of gold, GST payable is ₹30.
How is GST calculated on gold jewellery?
GST is calculated as:
- 3% on the gold value
- 5% on making charges
The total GST payable is the sum of both.
Does GST apply to physical gold purchases?
Yes, 3% GST applies to physical gold, including gold coins, bars, and jewellery.
Is GST applicable on the sale of old gold jewellery?
- If an individual sells old gold to a jeweller, GST is not charged.
- If a registered dealer sells old gold jewellery, 3% GST is applicable on resale.
Can I claim a GST refund on gold?
Yes, GST refund can be claimed through input tax credit (ITC), but only by GST-registered jewellers or traders dealing in gold.
What is GST on gold imports and exports?
- Gold exports are zero-rated, meaning no GST is payable.
- Gold imports attract 3% IGST, along with applicable customs duties.
Is an e-way bill required for gold transportation?
Currently, gold is exempt from mandatory e-way bill generation under Chapter 71. However, the system allows optional e-way bill generation for gold movement.
Is GST applicable on gold investment schemes?
- Gold ETFs and Gold Mutual Funds are exempt from GST
- Digital gold and similar gold investment products attract 3% GST
Is GST charged on gold coins and gold bars?
Yes, 3% GST is applicable on the purchase of gold coins and gold bars.
Does GST differ for handmade and machine-made jewellery?
No, the GST rate remains the same—3% on gold value and 5% on making charges, irrespective of how the jewellery is made.
Is GST applicable on labour charges for jewellery repair?
Yes, 5% GST is applicable on jewellery repair and labour charges.
