GST on 18 Carat Gold: Rate, Use Case and Worked Calculation
Table of Contents
Anyone settling an 18-carat diamond ring eventually reaches the tax question, and the answer is short: gst on 18 carat gold is 3% on the gold value, with making charges taxed separately at 5%. Purity changes nothing here. The same 3% applies whether the piece is 18K, 22K, or 24K, so the karat choice affects the per-gram price, never the tax percentage. 18-carat gold, which is sold under the 750 hallmark because it contains 75% pure gold, is the standard metal for diamond-set and stone-heavy jewellery, which is exactly where most buyers first meet it. The guide includes: the rate and its CGST/SGST split, a quick-reference table with HSN code, a full worked calculation on a 10-gram purchase, input tax credit position for individuals vs businesses, and what the tax paid means when 18K gold is later pledged for a loan.
What Is the GST Rate on 18 Carat Gold?
The gold component is taxed at 3%, based on the market value of the metal at the time of sale. On an intra-state purchase, the invoice breaks down as 1.5% CGST and 1.5% SGST. On an inter-state sale, it reflects 3% IGST. Making charges, the labour of crafting the piece carries their own 5% when billed as a separate line.
Purity plays no part in the percentage. 18k gold gst is the same 3% that applies to 22-carat and 24-carat gold; only the taxable base differs, because 18-carat metal costs less per gram. The 750 stamp on an 18-carat piece certifies 75% gold content and nothing about tax. Gold jewellery articles fall under HSN code 7113, which is the classification a proper invoice quotes. These rates survived the September 2025 GST rate overhaul untouched, so the structure below remains current in 2026.
GST Rate Quick Reference Table
|
Component |
Rate |
|
Gold value (18K/22K/24K) |
3% GST |
|
Making charges (itemised) |
5% GST |
|
HSN code, gold jewellery |
7113 |
Note: Rates shown reflect the prevailing GST structure for gold jewellery and are subject to change through official notifications.
The 3% divides equally into 1.5% CGST plus 1.5% SGST on bills raised within a state.
How to Calculate GST on 18 Carat Gold Jewellery: Step-by-Step
Five steps cover any 18 carat jewellery tax calculation, whatever the weight. Take a 10-gram 18-carat piece, assume ₹10,500 per gram as a working rate for 18K metal, and making charges of ₹800 per gram. Live rates on the purchase day are what actually apply; the figures here only show the method.
Work out the gold value: 10 grams × ₹10,500 = ₹1,05,000.
Work out the making charges: 10 grams × ₹800 = ₹8,000.
Apply 3% on the gold value: ₹1,05,000 × 0.03 = ₹3,150.
Apply 5% on the making charges: ₹8,000 × 0.05 = ₹400.
Add everything for the final price: ₹1,05,000 + ₹8,000 + ₹3,150 + ₹400 = ₹1,16,550.
Two tax lines, two different rates. That is the pattern to look for on any proper bill, and how to calculate the total follows the same route every time. A jeweller who quotes one bundled price without itemising the making charges applies 3% to the whole amount instead, under the composite supply treatment, which slightly changes the arithmetic.
Worked Example: 10 Grams of 18K Gold Jewellery
The same purchase, laid out as the invoice would show it:
|
Line item |
Amount (₹) |
|
Gold value (10g × ₹10,500, illustrative 18K rate) |
1,05,000 |
|
Making charges (10g × ₹800) |
8,000 |
|
GST on gold value at 3% |
3,150 |
|
GST on making charges at 5% |
400 |
|
Total payable |
1,16,550 |
Note: All amounts are illustrative examples based on an assumed rate. Actual prices and taxes depend on the day's gold rate, the jeweller's charges, and prevailing GST rules.
So the total tax of ₹3,550 comes to roughly 3.1% of the ₹1,13,000 pre-tax bill, sitting between the two headline rates because the gold gst rate and the making-charge rate blend in proportion.
One more distinction matters for anyone buying through a business. An individual consumer cannot recover any of gst on gold jewellery paid at purchase; it is a final cost. A GST-registered jewellery business, by contrast, may claim input tax credit on gold bought as manufacturing input, subject to GST rules and reconciliation against its GSTR-2B. The making-charges gst side carries its own restrictions for businesses, so the two credits do not behave identically.
18 Carat Gold GST and Gold Loans: What to Know
Buyers often assume the tax paid raises what the jewellery is worth. It does not. When an 18-carat ornament, an 18k diamond ring gst gold buyers once paid on included, is pledged for a loan, the lender assesses the intrinsic value of gold in the piece, not the GST-inclusive purchase price. The 3% paid at the counter is a sunk cost. The making charges, and the 5% GST on the making, sit outside the pledged value too, and stones are deducted before weighing.
18-carat gold with the 750 hallmark is generally accepted as collateral, subject to lender policy. Under RBI's framework, lenders work off the day's benchmark price, taken as the previous day's close that IBJA or a SEBI-recognised exchange publishes, or the trailing 30-day average when that sits lower, with the reference rate applied according to the assessed purity of the gold. IIFL Finance offers gold loans against ornaments in the 18 to 22 karat purity range, subject to assessment and prevailing guidelines, and an indicative eligible amount can be checked online using weight and purity before any branch visit.
Conclusion
The tax picture on 18-carat gold reduces to two numbers: 3% on the value of gold and 5% on itemised making charges, identical in structure to what 22K and 24K buyers pay. The worked example shows how the two lines combine on a real bill, and the 750 hallmark changes the purity story, never the tax one. What the GST does not do is travel with the jewellery; at resale or pledge, only the metal counts. For a household that later needs funds, that metal value may back a gold loan without the ring or pendant being sold, subject to eligibility and applicable guidelines. Figures in this guide are illustrative throughout, and actual prices, taxes billed, and loan amounts depend on the day's rates, the specific piece, and the guidelines that apply on the day of purchase or pledge.
Frequently Asked Questions
Is the GST rate on 18 carat gold different from 22 carat or 24 carat gold?
No. Gold will be charged on the rate of 3% irrespective of the purity i.e. 18K, 22K, and 24K purchases will all attract the same percentage on the value of gold. What changes is the base: the higher the karat, the higher the rupee amount of tax, even as the rate remains fixed. Itemised charges attract a separate 5%. A quick look at the invoice settles it. The gold line and the making line each have a clearly stated rate.
Does GST apply to making charges on 18 carat gold jewellery?
Yes. Making charges on gold jewellery, 18-carat pieces included, attract 5% GST, separate from the 3% on the gold value, and both appear as distinct lines on a proper GST invoice. The exception is a bundled quote: where the jeweller charges one composite price without itemising the making component, 3% applies to the whole amount instead. Since making charges are often negotiable, asking for them as a separate line keeps both the discount conversation and the tax treatment transparent.
What is the HSN code for 18 carat gold jewellery?
HSN code 7113. That classification covers articles of jewellery in precious metals, and 18-carat pieces fall squarely within it; the GST rate under this code is 3% on the gold's value. Unwrought gold such as bars sits under 7108 instead. Job work on gold jewellery, the outsourced crafting jewellers commission, is billed under code 9988 and carries 5% GST. A valid invoice quotes the HSN code alongside the seller's GSTIN, which is worth glancing at before paying.
Can I claim GST back when I sell my 18 carat gold?
No. For an individual consumer, the GST paid at purchase is a final, non-recoverable cost; selling the jewellery later does not trigger any refund, and no fresh GST is charged on a personal sale to a jeweller either. Input tax credit exists only for GST-registered businesses in the gold trade, which may claim it on eligible purchases used in taxable supply. When budgeting a purchase, treating the 3% and 5% as permanent additions to cost keeps expectations accurate.
Does the 750 hallmarks affect the GST rate?
No. The 750 stamp means that the piece contains 75% pure gold which is what 18 carat means; it doesn't say anything about tax. The 3% GST over the value of gold is the same for all types of hallmarked gold whether it is 750, 916 or 999. The hallmark does matter at valuation. Purity, certified, makes it quicker and cleaner to assess when the piece is sold or pledged. The karat is already established by the BIS mark rather than argued over.
Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more
