The introduction of Goods and Services Tax (GST) brought notable changes to the taxation structure of gold in India. Currently, a 3% GST is levied on both 24-carat and 22-carat gold purchases, impacting the overall cost of physical gold significantly.
Current GST Rates on Gold
- Physical and Digital Gold: A flat 3% GST is applicable on the purchase of physical gold, including gold bars, coins, and jewelry, as well as on digital gold.
- Gold Jewellery Making Charges: When purchasing gold ornaments, a 3% GST is applied not just to the gold value but also to the making charges.
- Gold Purchase Example: For instance, buying gold worth ₹1,00,000 would incur an additional ₹3,000 as GST (split equally as 1.5% CGST and 1.5% SGST).
This guide provides a detailed breakdown of GST implications on various forms of gold purchases.
GST Rates for Different Gold Forms
GST on 24 Carat Gold
- Rate: 3%
- Applicability: This rate covers all pure gold purchases, including 24-carat gold bars, coins, and ornaments.
GST on 22 Carat Gold
- Rate: 3%
- Applicability: The same 3% GST applies to 22-carat gold articles, whether in jewelry, bars, or coins.
GST on Digital Gold
- Rate: 3%
- Details: Buying digital gold also attracts a 3% GST, similar to physical gold.
GST on Gold Investment Products
Investment options like Gold ETFs (Exchange-Traded Funds), Sovereign Gold Bonds (SGBs), and Gold Mutual Funds are generally exempt from GST on the gold value itself. However, any related service fees, management charges, or transaction costs associated with these investments may attract an 18% GST. Investors should be aware of these additional costs while investing in such schemes.
GST on gold HSN codes
| HSN code | Product description | GST Rate |
| 7108 | Gold (including gold bars and ingots) | 3% |
| 7113 | Articles of jewelry and parts thereof (including gold jewelry) | 3% |
| 7114 | Other articles of gold (excluding jewelry and parts) | 3% |
GST calculation on gold
Below example compare gold prices under pre-GST and the GST regime:
| 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 on gold at 3% | Nil | 3,000 |
| Total value of gold | 1,02,010 | 1,03,000 |
Input Tax Credit (ITC) Availability for GST on Gold Business
Jewellers and gold merchants are eligible to claim Input Tax Credit (ITC) on GST paid for raw materials such as gold and charges incurred for job work. Additionally, if a gold merchant pays GST under the reverse charge mechanism for services received from an unregistered job worker, they can still avail the ITC on such tax payments.
Key Advance Rulings on GST Applicability to Gold Transactions
1. Karnataka AAR – M/s Attica Gold Pvt. Limited (Order No. KAR/ADRG/15/2020 dated 23rd March 2020)
Issue: The applicant, engaged in spot cash purchase of gold and redemption of pledged gold at prevailing market prices, sought clarification on two aspects:
- Valuation: In second-hand purchases of gold from unregistered individuals, where there is no alteration in the goods’ form or quality, should GST be charged only on the margin (i.e., the difference between selling price and purchase price) as per Rule 32(5) of the CGST Rules?
- ITC Claim: Is ITC available if purchases are made from dealers where the margin scheme applies?
Ruling
- Valuation: Yes, GST will be applied only on the positive difference between the selling price and the purchase price when dealing in second-hand gold goods without any change in their form or type, following Rule 32(5) of the CGST Rules. If the purchase price exceeds the selling price, no GST is payable. Importantly, ITC cannot be claimed on such purchases under this method.
- ITC Claim: ITC can be claimed if the second-hand gold jewellery is purchased from a registered dealer. However, in such cases, the margin scheme will not apply to subsequent sales.
2. Maharashtra AAR – M/s Biostadt India Limited (Order No. GST-ARA-72/2018-19/B-165 dated 20th December 2018)
Issue: Biostadt India Limited, a company dealing in crop protection chemicals and hybrid seeds, launched a promotional campaign titled ‘Kharif Gold Scheme 2018’, where customers were offered 8 gm and 10 gm gold coins for exceeding specified purchase quantities or making minimum payments. The questions raised were:
- ITC Claim: Can the company avail ITC on the procurement of gold coins for sales promotions?
- ITC Claim for Similar Promotions: Is ITC available for other similar promotional schemes?
Ruling:
- ITC Claim: No, ITC cannot be availed for the purchase of gold coins used in promotions. The primary business activity of the company is not the distribution of gold coins. Under Section 17(5) of the CGST Act, which overrides Section 16, ITC is disallowed for goods disposed of as gifts, and the gold coins given under the scheme are treated as gifts.
- ITC Claim for Similar Promotions: Similarly, ITC is not allowed for gold coins or goods distributed under other promotional schemes.
Frequently Asked Questions
How much GST is applicable on gold?
Gold attracts a GST rate of 3% in India. This is divided equally into CGST (1.5%) and SGST (1.5%) for intrastate sales, or a flat 3% IGST for interstate sales. Additionally, gold jewellery making charges are taxed separately at a 5% GST rate.
What is the GST rate for hallmark gold?
Hallmark gold is also taxed at 3% GST, while the making charges incur 5% GST.
What is the GST on gold bars?
Gold bars are subject to a 3% GST rate.
How much GST is levied on digital gold?
Digital gold purchases attract 3% GST, which is applicable on associated costs like insurance, storage, and trustee fees, similar to physical gold.
Can individuals claim GST credit on gold purchases?
Only individuals engaged in the business of selling gold jewellery or importing gold can claim GST credit. Personal buyers or investors cannot claim an input tax credit on gold purchases.
Is an e-way bill required for transporting gold?
Currently, an e-way bill is not mandatory for transporting gold unless the Central Board of Indirect Taxes and Customs (CBIC) changes the existing exemption. However, a separate window for gold movement has been added on the NIC portal.
What is the GST rate for gold jewellery making charges?
Jewellers charge a 5% GST on the making charges in addition to the gold price.
Is GST applicable when exchanging old gold jewellery for new ones?
No, GST is not applicable when old gold jewellery is exchanged for new jewellery in India.
Does GST apply when selling old gold jewellery?
If a registered dealer sells old gold jewellery, 3% GST is applicable. However, if an individual sells old jewellery to a dealer, no GST is charged on that transaction. The dealer must charge GST when reselling the item.
Is GST applicable to gold imports in India?
Yes, gold imports attract 3% IGST, along with customs duties like Basic Customs Duty and Social Welfare Surcharge, increasing the final import cost.
Can businesses claim an input tax credit (ITC) on gold purchases?
Businesses can claim ITC on gold only if it is used for business activities like resale or manufacturing. Gold bought for personal use or investment purposes is not eligible for ITC.
What is the GST rate for 22 karat gold?
The GST on 22kt gold remains 3%, meaning for every ₹1,000 spent, ₹30 is payable as GST.
Is there a way to avoid paying GST on gold purchases?
By selling your existing gold and using the proceeds to purchase new gold, you can effectively avoid paying GST on the new purchase.
Can a GST refund be claimed on gold?
GST refunds can be claimed through Input Tax Credit (ITC) if you are a GST-registered business involved in the gold jewellery trade.
Is the GST rate on gold uniform across India?
Yes, the same 3% GST rate applies to gold purchases nationwide, ensuring uniform pricing on the tax component.
What are the GST rules for gold imports and exports?
Exports of gold are treated as zero-rated supplies under GST, meaning no GST is charged. However, importing gold attracts 3% IGST plus customs duties.
Is there additional GST on gold making charges?
Yes, apart from the 3% GST on the gold itself, a 5% GST is applicable on jewellery making charges.
How is GST applied to gold investment schemes?
Gold Exchange Traded Funds (ETFs) and Gold Mutual Funds are exempt from GST. However, investments in digital gold or similar instruments are taxed at 3% GST on the invested value.
What is the GST rate on 24 carat gold?
The GST on 24kt (pure) gold is also 3%.
How is GST calculated on 22 carat gold purchases?
GST on 22 carat gold is calculated at a 3% rate based on the purchase value.Does GST apply to physical gold purchases?
Yes, buying physical gold items like coins, bars, or jewellery attracts 3% GST on the gold content.
