22 Carat Gold GST Rate: A Guide for Buyers and Sellers
- Rashmita Choudhary
- Nov 12
- 7 min read
In India, gold is a valuable item that can be used as collateral in addition to being a cultural icon. The Goods and Services Tax (GST) significantly altered the tax structure for a number of industries, and gold is no exception. In India, the Goods and Services Tax (GST) on gold, a valuable and highly sought-after commodity, has become a crucial consideration for investors and buyers. Currently, the value of gold, both 24 carat and 22 carat, is subject to a 3% GST rate, and the manufacturing costs of gold jewellery are subject to an extra 5% GST.
Table of Contents
GST on Purchase of Gold in India
In India, the value of gold is subject to a 3% GST charge (1.5% CGST + 1.5% SGST). For instance, the total GST due on a Rs. 1,00,000 gold purchase is Rs. 3,000. All types of gold, including jewellery, coins, and bars, are subject to this gold GST rate. Additionally, the cost of producing gold jewellery is subject to a 5% GST. In order to simplify taxation and standardise rates for gold transactions nationwide, the previous tax structure of 1% VAT and 1% service tax under the pre-GST regime was replaced with the current 3% gold GST rate.
The following table illustrates the tax rates on gold before and after the implementation of GST in India:
Particulars | Pre-GST | Post-GST |
GST Rate on Gold Value | Nil | 3% |
Sales Tax | 1% | Nil |
VAT | 1% | Nil |
Gold Making Charges | Nil | 5% |
Import Duty | 12.5% | 12.5% |
22 Carat Gold GST Rate
In India, 22-carat gold is subject to a 3% GST tax. For example, you will pay Rs. 30 in GST if you buy Rs. 1,000 worth of 22-carat gold. Additionally, a separate 5% GST rate would be applied to any making charges for jewellery made from 22-carat gold. It's crucial to remember that the GST rate is the same regardless of the gold's purity. Whether the gold is 22-carat, 24-carat, or any other purity, the tax is charged on its worth. The same rate is applicable to the purchase of digital gold in India.
Gold ETFs, Sovereign Gold Bonds, and Gold Mutual Funds are examples of gold investment plans that are often exempt from GST on the actual gold. However, service fees, administration fees, and other costs related to these plans are subject to GST. Because they may be subject to 18% GST, investors must make sure that any service costs are recorded.
GST on Gold Jewellery Making Charges
A 5% GST rate, or 2.5% SGST plus 2.5% CGST on the making charges alone, is applied when gold jewellery making charges are displayed individually on the purchase bill. In India, fees for fixing gold jewellery are subject to the same 5% GST. Therefore, the GST due for the service rendered will be Rs. 50 if the cost of producing or repairing your gold jewellery is Rs. 1000. The 18% rate on making charges that was in effect when the GST was implemented in 2017 has been reduced to the current 5% rate. Additionally, the current rate is less than the 12% tax that applied to pre-GST gold production and repair fees.
GST on Gold HSN Codes
HSN code | Product description | GST Rate |
7108 | Gold (including gold bars and ingots) | 3% |
7113 | Jewellery articles and parts thereof (including gold jewellery) | 3% |
7114 | Other gold articles (excluding jewellery and parts) | 3% |
Input Tax Credits for GST on Gold Business
Gold companies can benefit from India's GST system by using the Input Tax Credit (ITC). Jewellers are eligible to receive ITC on GST paid for:
Raw Gold: This lessens the end product's overall GST load.
Job Work Charges: ITC is also available for costs related to the refining of gold for jewellery.
Importantly, a jeweller can still claim ITC for the tax paid even if they pay GST on supplies from an unregistered job worker (using a process known as a reverse charge). Jewellers can lower their overall GST burden by successfully claiming ITC. Lower consumer pricing could result from this, increasing the market competitiveness of gold jewellery.
GST Exemption for Gold
In 2018, a GST exemption boosted Indian gold exports. Examine how the GST Council's functions affect tax exemption determinations. By directly addressing the GST burden on exporters, this exemption increases the competitiveness of their goods on the global market. It's crucial to remember that only business-to-business transactions are covered by this exception. This exemption has no effect on domestic customers who buy gold jewellery in India; they will still be required to pay the regular 3% GST on the gold and 5% GST on the manufacturing costs.
GST Rate Impact on Gold Prices
Gold's price has gone up, and its demand has decreased after GST rates were implemented. The following discusses how the GST rates on gold affect its prices:
Following the implementation of GST, the price of gold has gone up. The demand for gold has decreased as a result of the GST on gold rates rising from 1.2% to 3%, which has affected the liquidity of gold assets.
Gold production costs have been subject to a 5% GST since 2022. Generally speaking, GST on gold is either a flat fee or a predetermined percentage of the gold that is bought. Because different jewellers have different production costs, the GST on gold coins and jewellery frequently varies.
In the past, India's gold imports grew faster than its gold exports. To solve this problem, the government has raised the customs charge on gold imports. It sought to improve local gold production, reduce gold smuggling and input costs, and boost the competitiveness of gold exports.
India benefits from free trade agreements (FTAs) with certain nations, such as South Korea. According to the agreement, importers who have registered for GST are exempt from paying an extra 10% customs fee when shipping gold.
Conclusion
GST, which streamlines the indirect taxation structure, unquestionably marks a significant change in India's tax environment. But there are still repercussions to this reform. The total cost of this valuable metal has increased due to the 3% GST on 22 carat gold, which is applied to both the gold's worth and making costs. However, astute purchasers have ways to lessen this effect. People can continue to invest in the timeless appeal of gold while navigating the GST landscape by making educated decisions and using alternative investment avenues.
FAQs
Q1. How much GST on gold?
Gold is subject to a lower GST rate than the majority of products and services. In India, the GST rate on gold or gold coins is 3%. Depending on whether the sale is intrastate or interstate, this tax is levied at either the IGST rate of 3% or the sum of CGST and SGST (1.5% each). Additionally, the GST on jewellers' gold-making fees is calculated based on the pricing and is 5% overall.
Q2. What is the GST on 22kt gold?
22kt gold is subject to 3% GST. This implies that the GST is levied at the rate of Rs. 30 for every Rs. 1,000 worth of gold purchased.
Q3. How much GST on hallmark gold?
While the production charges are 5%, the GST on hallmark gold is 3%.
Q4. How much is the GST on a gold bar?
Gold bars are subject to a 3% GST rate.
Q5. Are there different GST rates for different purities of gold?
No, the 3% GST rate applies to all gold purities, including 18K, 22K, and 24K.
Q6. How much GST on digital gold?
GST on digital gold is 3% on all costs associated with purchasing physical gold, such as insurance premiums, storage costs, and trustee fees.
Q7. Can individuals claim GST on gold?
A person who imports gold and sells gold jewellery may be required to pay 3% IGST. He is eligible to claim GST on imported gold. However, tax credits are not available to those who are not in the gold industry.
Q8. Is the same GST applicable to the same gold ornament anywhere in India?
Yes, gold ornaments sold wherever in India are subject to the same GST rate.
Q9. Is GST applicable for exchanging old gold jewellery for new gold jewellery?
In India, exchanging old gold jewellery for new gold jewellery is not subject to GST.
Q10. Does GST apply to the sale of old gold jewellery?
If a registered dealer sells old gold jewellery, then GST is indeed applicable. GST is not applied when a person sells gold to a dealer. However, a 3% GST is levied when the dealer resells the old gold jewellery.
Q11. Do we need an e-way bill for gold transportation?
It is not necessary to generate an e-way bill until the CBIC notifies that the exception in Chapter 71 on gold has been removed. Nonetheless, NIC has modified the technology to create an e-way bill for gold movement in a different window.
Q12. Does GST apply to physical gold purchases?
Yes, the gold content of tangible gold purchases (coins, bars, jewellery) is subject to 3% GST.
Q13. How is GST applied in the case of gold investment schemes?
In India, purchases of gold mutual funds or exchange-traded funds (ETFs) are currently free from GST. However, depending on the amount deposited, gold investments in India, whether digital or paper, are subject to a 3% GST charge.
Q14. What is GST on gold imports and exports?
Because gold exports are "zero-rated" under the GST statute, there is no GST rate applied. Although the rate of taxation is zero, the supply is taxable. However, gold imports are subject to a 3% IGST in addition to a 6% customs charge.
Q15. Can businesses claim an input tax credit (ITC) on the purchase of gold?
When purchasing gold, businesses are only eligible to receive an input tax credit (ITC) if the gold is utilised for manufacturing or selling. However, ITC cannot be claimed if the gold is bought for investment or personal use.
Q16. How to avoid GST on gold?
Sell gold and buy fresh gold from it. You will be able to avoid paying GST on gold in this way.
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