You cannot sell, exchange your old un-hallmarked gold jewellery now without doing this

The Indian government recently introduced a game-changing update to the regulations surrounding the sale of gold items such as gold jewellery and other artifacts. The new rules mandate that from April 1, 2023, all gold jewellery and artifacts must have a Hallmark Unique Identification (HUID) number. The HUID number offers a distinct identity to each gold item and ensures the promised purity. Apart from this, gold articles must also have the Bureau of Indian Standards (BIS) logo and purity mark (such as 22K or 18K as applicable). In a country that traditionally turns to gold as a safe investment, these new rules are expected to bring greater transparency, credibility and enhanced consumer confidence when it comes to the purchase of gold jewellery and artefacts.

Purchase of new gold jewellery has now become transparent and safer. However, if you have old, un-hallmarked gold jewellery, you will not be able to sell it or exchange it for new designs unless you get it hallmarked first.

According to the BIS, consumers who have un-hallmarked gold jewellery in their possession must mandatorily get it hallmarked before selling it or exchanging it for new designs. In this case, consumers have two options. They can get the old, un-hallmarked jewellery hallmarked through a BIS registered jeweller. A BIS registered jeweller will take the un-hallmarked gold jewellery to the BIS Assaying & Hallmarking Centre to get it hallmarked. A consumer will have to pay a nominal fee of Rs 45 per article to get the gold jewellery hallmarked.

The second option available to consumers is to themselves get the jewellery tested from any BIS-recognised assaying and hallmarking centre. The consumer will have to pay the stipulated nominal fees of Rs 45 per article in case the number of articles for testing is five or more, or a minimum charge of Rs. 200 in case the consignment consists of four articles. The nominal fee to be paid by a consumer for getting the gold article tested remains the same, under both the options.

The BIS has issued separate guidelines for testing old and un-hallmarked gold jewellery. The test report issued by a BIS-recognized assaying and hallmarking centre is a certificate about the purity of the jewellery. The consumer can take this report to any gold jeweller to sell their old un-hallmarked gold jewellery.

Do note that if a consumer possesses gold jewellery hallmarked with the old/earlier hallmark signs, it will still be considered as hallmarked jewellery. Gold jewellery that is already hallmarked with old signs does not need to be re-hallmarked with the HUID number. Such hallmarked jewellery can be easily sold or exchanged for new designs.

Exemptions from mandatory gold hallmarking rule
Though gold hallmarking has been mandatory in India from June 16, 2021, there are certain exemptions. These are:

• Jewellers with an annual turnover up to Rs 40 lakh
• Gold articles weighing less than 2 grams
• Any article meant for export, which confirms to any specific requirement of the foreign buyer
• Jewellery meant for international exhibitions and for government-approved business to business domestic exhibitions
• Any article intended to be used for medical, dental, veterinary, scientific or industrial purposes
• Gold watches, fountain pens and special types of jewellery, including Kundan, Polki and Jadau
• Gold bullion in any shape of bar, plate, sheet, foil, rod, wire, strip, tube or coin

How new gold buying rules help consumers
The gold hallmarking rules further offer consumers' protection in case the jewellery does not conform to the description associated with the HUID. As per the provision under Rule 49 of BIS Rules, 2018, a consumer will be entitled to claim compensation that is two times the amount of difference, calculated on the basis of shortage of purity for the weight of such article sold and the testing charges. For example, if a customer has bought a gold article weighing 20 grams from a jeweller who has indicated the purity to be 22k, but the HUID description of the article specifies the purity as 18k, then the customer is entitled to the following compensation:

• Rate for 1 gram of 18k: Rs.5,000
• Rate for 20 grams of 18k: Rs.1,00,000
• Rate for 1 gram of 22k: Rs.6,000
• Rate for 20 grams of 22k: Rs.120,000

Compensation amount = 2 X (120,000 - 100,000) + testing charges = Rs.40,000 + testing charges.

Further, jewellers who sell gold jewellery without HUID (excluding exempted categories) could face a penalty that is five times the price of the jewellery, or one year imprisonment, or both under the provisions of Section 29 of the BIS Act, 2016.

Gold hallmarking has become mandatory from June 16, 2021. The hallmarking practice under the new rules has been made compulsory across the country in a phased manner. The new rules are positive from a consumer standpoint to safeguard their interests and ensure high quality standards. However, some retailers were up in arms ahead of the April 1, 2023, deadline. They claimed that even though they have been provided time of almost close to 2 years (since the June 2021 announcement), they have not been able to exhaust their old stock for which they had already made a specific declaration. Keeping these concerns in mind, the government has extended the deadline to clear the old stock without HUID until June 30, 2023. This timeline has been extended only for those jewellers and retailers who have declared their old stock and made a specific declaration in this regard.

How India's gold hallmarking rules fare in comparison to world
Gold hallmarking regulations vary from country to country. For example, some countries such as Dubai, the UK, Hungary, Sweden, Finland and Russia, require a hallmark. Independent bodies certify the gold jewellery in these countries.

For example, in Dubai, gold purity is certified by the Dubai Central Laboratories Department (DCLD) through Bareeq Certification. In nations such as Italy and Germany, the only requirement is that the maker's mark should be registered, and these are used as a sort of independently monitored hallmark. In the US, there is no single official gold hallmarking system for gold jewellery. Instead, there are independent assaying agencies across states and cities. Gold hallmarking is voluntary in China and Switzerland. The HUID system is unique to India; it was introduced to ensure the country follows the world's best standards in gold jewellery.

The new hallmarking regulations are expected to boost India's efforts to bring greater transparency in the buying and selling of gold, by imparting legitimacy and providing third-party confirmation of the marked authenticity of gold. In the long run, hallmarking will enable buyers to make the right choice and ensure that they do not get cheated with inferior quality gold products. This move will also lay the broader groundwork to facilitate the shift to a more organised trade format and create a level-playing field for jewellers.

(Stuti Galiya is a Partner and Srishti Suresh is an Associate at Khaitan & Co. The views expressed are personal.)