The Goods and Services Tax (GST) has significantly impacted India’s gold industry. In Indian culture and the economy, gold occupies a special place as one of the most prized and precious commodities. Since the GST was put in place on gold, many gold-related deals have changed. For example, the buying, charging, and selling of ornaments have all changed. The goal of this blog is to make it clear how GST works for gold coins, jewels, and other types of gold in India.
What is GST on Gold?
With the implementation of the GST in July 2017, a single tax system took the place of the several indirect taxes that were previously applied to gold. But now, what is the GST on gold? is the query. Currently, the GST rate on gold is at 3%. Whether you are purchasing 22-carat gold for jewellery or 24-carat gold, which is frequently found in bullion and coins, this rate is important.
GST applies to the manufacturing charges for gold ornaments in addition to the base rate, increasing the overall cost of buying gold jewellery.
GST on Gold Jewellery and Ornaments
The 3% GST on gold jewellery is applicable when buying gold jewellery or gold ornaments. However, there are additional taxes to consider. When purchasing gold jewellery, you must also consider the manufacturing costs, which are subject to an additional 5% GST. This indicates that the entire amount you pay consists of:
- 3% GST on gold itself
- 5% GST on gold jewellery making charges
Therefore, taxes on manufacturing costs will also raise the total cost if you are purchasing a piece of jewellery with heavy craftsmanship.
GST on Gold Coins and Bullion
Bullion and gold coins are frequently regarded as investment assets. Like other gold purchases, the GST on gold coin and GST on gold biscuit are 3%. However, as coins and bullion usually only undergo refining and no further manufacturing processes, there is no additional GST for manufacturing charges.
GST on Gold in Different Cities
In India, the cost of gold and GST varies slightly per area. For example, the GST on gold in Delhi is set at the same 3% rate, but demand and local market conditions may have an impact. Therefore, gold rates might change even if the gold GST percentage stays the same across the country.
How to Calculate GST on Gold?
The calculation of GST on gold purchases is relatively simple. The following is a concise guide to how to calculate GST on gold:
- Calculate the price of gold by utilizing the current market rate and the weight.
- Add 3% GST to this price.
- If buying jewellery, also add 5% GST on the making charges.
For example, the total GST would be in the event that you are purchasing a gold necklace costing INR 50,000 with manufacturing charges of INR 5,000.
- 3% on INR 50,000 = INR 1,500 (GST on gold purchase)
- 5% on INR 5,000 = INR 250 (GST on gold making charges)
The total amount payable would then be INR 51,750.
Impact of GST on Gold Prices
The GST replaced a variety of previous taxes, including VAT, excise duty, and service tax, thereby simplifying gold taxation. This modification simplified the taxation process, but it also marginally increased the price of gold that consumers pay. The GST on gold rate is now consistent and predictable throughout the country, which simplifies understanding the tax implications prior to making a purchase.
GST Registration for Gold Traders
GST registration is required for companies that sell gold if their turnover surpasses the specified amount. This guarantees that business owners adhere to tax laws and properly collect GST from customers. Penalties and legal problems may result from not registering.
What About Tax on Diamonds?
Even though the content is mostly about gold, it’s important to know that the GST on diamonds is only 1.5%, which is less than the GST on gold. People who buy jewellery with diamonds will have to think differently about GST than people who buy gold jewellery.
GST on Gold Jewellery 2024: What’s New?
In 2024, the GST on gold jewellery will still be the same, and no major changes are predicted. But the government does change tax rates from time to time, so it’s always good to know about any changes that could affect GST on gold jewellery in 2024.
Summary
Even though the GST on gold in India has simplified the tax system, gold prices have risen. It is very important to know how much GST is on gold before you buy gold jewellery, coins, or metal. Remember that the GST rate on gold is 3%, and the GST rate on jewellery making costs is an extra 5%. Due to the GST’s streamlined tax structure, buyers now find it simpler to comprehend and compute the taxes associated with gold purchases, guaranteeing uniformity and transparency in gold prices throughout India.
Understanding GST on Gold: Everything You Need to Know (FAQ’s)
Gold jewellery is subject to GST at a rate of 3% on the value of the gold and 5% on the costs of making it. This is true for all gold ornaments bought in India.
All types of gold, including bullion, coins, and jewellery, are subject to the 3% GST gold tax in India. It makes previous tax schemes simpler.
Diamond purchases are subject to a reduced 1.5% GST rate, resulting in a different tax status than gold, which is subject to a 3% GST rate.
Add 3% to the gold price and 5% to the manufacturing charges to calculate the GST. This structure significantly influences the final price of jewellery.
Yes, the GST on gold is always 3%, whether it’s jewelry, coins, or bullion. The GST increases to 5% when imposing charges on items.
The GST rate for 24-carat gold is the same as the rate for 22-carat gold: 3%. Both jewellery and gold coins purchased as investments are subject to this rate.
Yes, the GST on gold in India is consistent across all states, irrespective of regional differences, thereby making sure the uniformity of gold taxation.
In addition to the 3% GST on gold, consumers may be required to pay import duties when importing gold from outside India, which will result in an overall increase in cost.