GST on Gold: Rates, Making Charges & How to Calculate Your Total Tax
Table of Contents
Two percentages settle the tax on every gold bill in India. The gold gst rate is 3% on the metal's value, and making charges carry 5% where they appear as their own line, and neither number shifts with purity, so an 18-carat pendant and a 24-carat coin face the same rates. Sovereign Gold Bonds sit outside GST entirely, and pledging gold for a loan triggers no tax at all, two facts buyers rarely hear from a jeweller. Everything else is arithmetic, and the arithmetic takes five steps. This guide lays out the rate structure with its HSN codes, works a complete calculation on a 10-gram purchase, compares digital gold with ETFs and bonds, explains what happens on an old-gold exchange, and covers the gst on jewellery question that matters most to households: what a lender counts when the same piece is pledged.
What is the GST Rate on Gold in India?
3% on the gold, 5% on the crafting. The gold rate splits into 1.5% CGST plus 1.5% SGST when buyer and seller sit in the same state; across state lines it becomes 3% IGST. Purity has no say in this. The gst on gold runs identical for 18K, 22K and 24K, since the percentage attaches to value, not karat.
Classification follows three codes. Unwrought gold, meaning bars and the like, sits under HSN 7108, coins under 7118, while finished jewellery takes 7113. All carry the same 3%. That is the whole gold tax rate india framework in three sentences, and it has held steady since GST began, surviving the September 2025 slab rework untouched.
GST Rate Table: Gold, Jewellery & Making Charges
|
Item |
HSN Code |
GST Rate |
|
Gold bars and ingots |
7108 |
3% |
|
Gold coins |
7118 |
3% |
|
Gold jewellery |
7113 |
3% |
|
Making charges on jewellery (job work services are classified under 9988) |
- |
5% |
Note: Rates and classifications shown reflect the prevailing GST structure for gold and are subject to change through official notifications.
Sovereign Gold Bonds are exempt; being securities, they never enter the hsn code gold table at all.
How to Calculate GST on a Jewellery Purchase
Five steps, one bill. Take a 10-gram 22-carat chain, with the day's 22K rate taken as ₹13,000 per gram strictly for illustration, and flat making charges of ₹3,000. Whatever the market quotes on the purchase day replaces the assumption.
Gold value: 10 × ₹13,000 = ₹1,30,000.
3% on the gold: ₹3,900.
Making charges as billed: ₹3,000.
5% on the making charges: ₹150.
Final bill: ₹1,30,000 + ₹3,900 + ₹3,000 + ₹150 = ₹1,37,050.
Anyone wanting a gst on gold calculator can run these same steps on a phone in under a minute; the tool just automates this sequence. One rule changes the maths, though. Where the jeweller quotes a single bundled price and never itemises the making component, the whole amount is read as one composite supply, gold being the principal part, and 3% covers everything. So how a bill is drawn decides whether the 5% appears at all. To calculate gst on gold purchase totals correctly, check which billing style the invoice follows first.
GST on Digital Gold, Gold ETFs & Sovereign Gold Bonds
Three routes to gold, three tax outcomes. Digital gold carries 3% at purchase, exactly like a physical coin, because vaulted metal backs each gram and the law reads it as goods. The gst on digital gold cannot be recovered later.
Gold ETFs are different animals. Units bought on an exchange attract no GST, since they are securities; the gold etf gst question ends there, with any tax showing up only inside fund-level costs. Sovereign Gold Bonds go a step further. As government securities they are exempt outright, at issue and at redemption, and the widespread belief that a 3% sovereign gold bond gst exists is simply a misconception. The exemption follows from classification: bonds are paper claims, never a supply of physical gold.
GST on an Old-Gold Exchange
Exchange season brings the most billing confusion of the year. The position that generally holds: GST is charged on the value addition, meaning the new gold added plus the itemised making charges, rather than on the old gold returned across the counter. The customer's side stays clean, since an individual giving up personal jewellery makes no taxable supply, so the gst on old gold exchange never lands on the seller of the old piece. The exact treatment does depend on how the jeweller structures and documents the exchange, and billing practice varies between shops, which makes reading the invoice before signing the one habit worth keeping when exchanging gold jewellery gst questions arise.
Gold Loans and GST: What Borrowers Can Expect
Nothing. That is the tax on pledging gold, and it deserves saying plainly: handing jewellery to a lender as collateral is not a sale, no ownership transfers, and no gold loan gst arises on the pledge or on the loan money itself. Only attached services, a processing fee for instance, carry GST as service charges.
The second half matters just as much. A lender values the pledged piece on its current metal worth, priced off RBI-mandated benchmarks rather than off the original bill, so the 3% and 5% once paid at purchase play no part in the loan amount. An IIFL Finance gold loan works on exactly that basis, with the eligible figure resting on weight, verified purity, and the day's benchmark rate, subject to assessment and prevailing guidelines. The gold loan tax picture, in short, is friendlier than most borrowers expect.
Conclusion
The whole subject compresses into a pocket summary: 3% on gold value under HSN 7108, 7118 or 7113 depending on form, 5% on itemised making charges, one composite-supply exception when bills are bundled, exemption for bonds and ETFs, and silence on pledges. The worked example shows the five steps any buyer can rerun with live numbers on the day. And for a household that later needs cash, the same jewellery may support a gold loan without a sale, sized on its verified metal value rather than the tax-inclusive price once paid, subject to eligibility and applicable guidelines. Figures used here are illustrative throughout; actual bills, rates, and loan amounts follow the day's market price, the individual purchase, and the guidelines standing at the time.
Frequently Asked Questions
Is the GST rate different for 22K and 24K gold?
No. The 3% rate covers every purity of gold, 18K through 24K, without exception. What purity changes is the price per gram, so a 24-carat piece produces a larger rupee amount of tax simply because its taxable value is higher, while the percentage never moves. Making charges take their own 5% whatever the karat. A side-by-side look at two invoices, one for a 22K chain and one for a 24K coin, settles the point faster than any explanation.
Can I claim Input Tax Credit (ITC) on gold I buy as a consumer?
No. ITC belongs to GST-registered businesses alone; an individual buying jewellery for personal use has no route to recover the 3% or the 5%, and both amounts are final costs from the moment the bill is paid. Registered jewellery businesses may claim credit on metal bought as a manufacturing input, within the conditions the GST framework sets and after reconciliation with filed returns. For household budgeting, the working rule is simple: treat the GST as part of the purchase price, permanently.
Does GST apply when I sell my old gold to a jeweller?
No, not for the seller. An individual disposing of personal gold is not a registered supplier, so that sale attracts no GST at all, and nothing needs collecting or remitting. The jeweller taking the gold in may face duties of its own, reverse-charge treatment among them in certain situations, though those sit entirely with the business. Carrying the original purchase invoice helps at the counter, since documented purity and weight speed up the price offered.
What is the HSN code for gold jewellery?
7113, which covers articles of jewellery in precious metals. Raw and unwrought gold, meaning bars and similar forms, classifies under 7108, coins sit under 7118, and making charges billed as job work fall under code 9988 at 5%. The distinction matters mostly for the seller's returns, though a buyer benefits too: a proper invoice quotes the code, and its presence alongside the seller's GSTIN is a quick health check on the bill. Missing codes are a fair reason to ask questions before paying.
Is there GST on hallmark gold jewellery?
Yes, at the standard rates. Hallmarking certifies purity and changes nothing about tax, so a BIS-hallmarked bangle carries the same 3% on gold value and 5% on itemised making charges as an unhallmarked one. The hallmarking fee itself attracts 18% GST as a service at the jeweller-to-centre leg of the chain; on the buyer's bill it typically shows only as the small per-article charge that BIS billing norms provide for, never as an 18% tax line. Choosing hallmarked pieces therefore costs almost nothing extra in tax while paying off later at valuation.
Does pledging gold for a loan attract GST?
No. A pledge transfers possession as security, not ownership, so no supply of goods occurs and GST has nothing to attach to; the loan disbursement is likewise an exempt financial transaction. Where GST can appear is on the loan's service charges, such as a processing fee, taxed at the applicable service rate where charged. A look through the sanction letter's charge list shows exactly which lines carry tax, and interest is never one of them.
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
