GST On Gold: How To Calculate GST On Gold and Gold Jewellery?
Any tax on the supply of products, services, or both, excluding taxes on the supply of alcoholic beverages for human consumption, is referred to as a "goods and services tax." The Indian government levies GST on both the manufacturing and the services of gold. When you buy gold jewellery, you must pay GST on the gold as well as the making charges. Gold is one of the few products that are subject to varying GST rates at various stages of its life cycle, from purchase to manufacturing. As a result, the GST on gold refers to both the availability of gold and the production of gold ornaments. However, if a person sells old gold and uses the money to buy new jewellery, he or she does not have to pay taxes. Another way to put it is that by simply buying new gold in exchange for old gold pieces, one can save on GST taxes.
Different Rates applicable on Gold
The following are the current rates for buying new gold jewellery:
10% Customs Duty on imported gold
3% GST on the price of gold used in the jewellery
5% GST on the making charges
Gold is also subject to Customs Duty since it is an imported commodity.
The revised GST on gold tax slabs, which were declared on June 3rd, 2017, has been set at a rate of 3%. This means that all gold items, both completed and unfinished, will be subject to a 3% fee, which will be paid by the end-user.
There is a 5% surcharge on the making of gold jewellery costs. This is in stark contrast to the pre-GST period when there were no charges on gold jewellery. Following appeals from jewellery institutes and bodies of authority, the GST on gold producing charges was eventually revised and reduced to 5%.
GST on Gold Vs Pre GST on Gold
The GST rate on gold is different from the GST rate on any precious/semi-precious stones used in gold jewellery. You must be certain that these charges are listed separately on the bill. Gold jewellery is subject to a 3% tax on the value of the metal and a 5% making fee under the GST. Labor charges, in the form of making charges, can also be included by the sellers. As a result, you'll have to haggle with jewellers to get the price down. When purchasing gold jewellery, one had to pay Value Added Tax (VAT) of 1.2% and Excise Duty of 1% in addition to the Customs Duty. Interestingly, before the introduction of the GST, there were no taxes on making charges. However, if you sell or trade your old gold for new gold jewellery, you must pay a 3% fee.
How to calculate GST on Gold?
Consider the following scenario to better understand how GST is calculated on gold jewellery. Assume the gold price is Rs 40, 000 per ten gramme or Rs. 4,000 per gram, with a 10% making fee. To better understand the impact of GST, we've included pre-GST taxes in a separate column.
GST on Raw Gold: For purchasing 25 grams of gold, you will have to pay:
| Gold Particulars | Price Before GST | Price After GST | |
| Gold price for | 25 gram | Rs 100,000 | Rs 100,000 |
| Customs Duty | 10% | Rs. 10,000 | Rs. 10,000 |
| Service Tax | 1% | Rs. 1,100 | NIL |
| GST | 3% | NIL | Rs. 3,300 |
| VAT | 1.2% | Rs. 1,333.20 | NIL |
| Total Price for 25 gm gold | Rs. 1,12,433.20 | Rs. 113,300 |
GST on Gold Jewellery
If you want to purchase a 25-gram gold chain or jewellery, you will have to pay:
| Tax | Price Before GST | Price After GST | |
| Price of 25 gm of gold | Rs. 100,000 | Rs. 100,000 | |
| Customs Duty | 10% | Rs. 10,000 | Rs. 10,000 |
| Service Tax | 1% | Rs. 1,100 | NIL |
| GST | 3% | NIL | Rs. 3,300 |
| VAT | 1.2% | Rs. 1,333.20 | NIL |
| Making Charges (Above 10%) | 10% | Rs. 11,000 | Rs. 11,000 |
| GST on Making Charge | 5% | NIL | Rs. 550 |
| Total price of 25 gm Gold Jewellery | Rs. 1,23,433.20 | Rs. 1,24,850 |
Exemption on GST
At the GST council's 31st meeting, a GST exemption was declared on gold supplies made by a notified individual to licensed jewellery exporters. The aim of this exemption is to make India's gold export sector more competitive in the global market by lowering the GST burden on gold jewellery exporters.
Making charges are subject to a 5% levy, but licensed jewellers can claim a 2% Input Tax Credit on these expenses. The exemption, on the other hand, is intended to support gold jewellery exporters; it will not benefit domestic consumers.
Although it was expected that the implementation of GST would bring transparency and accountability to the gold sector, vendors are instead turning to the unorganized gold market and illegally importing raw gold, contrary to expectations.