24 Carat Gold GST Rate: A Detailed Overview
Asharam Swain- Apr 21
- 6 min read
Updated: Apr 29
In India, gold, a valuable and highly sought-after metal, is subject to the Goods and Services Tax (GST), which has been a crucial consideration for investors and buyers. Currently, the value of gold is subject to a 3% GST rate, and the costs of producing gold jewellery are subject to an extra 5% GST. The Harmonized System Nomenclature, or HSN code, is a classification system for commodities implemented by more than 200 nations worldwide. It gets connected to the GST rate for all goods. This article examines the GST on 24-carat gold in detail.
Table of Content
24 Carat Gold GST Rate
In India, the GST rate for 24-carat gold is 3% as of September 2024. Except for manufacturing charges, which are subject to an extra 5% GST, and any other extra expenses, this rate is applicable to the gold's actual worth. Precious metal taxes in India were made simpler with the implementation of the 3% GST rate on gold, which replaced the prior intricate state-by-state tax structure. The Goods and Services Tax has increased openness and ease of compliance by standardizing the tax rate nationwide for buyers and sellers in the gold market.
Calculation of 24 Carat Gold GST
There are a few simple steps involved in computing GST on 24-carat gold:
Step 1: Calculate the weight of pure gold
The weight of the item's pure gold determines the GST.
Step 2: Find the price of gold
Find the current 24-carat gold price per gram on the market.
Step 3: Determine the value of gold
To calculate the gold value, multiply the weight of pure gold by the current market price.
Step 4: Determine GST
To calculate the GST amount, multiply the gold value by 3%.
Step 5: Include import taxes, if any
increase the gold's worth by the most recent 6% import charge if imported.
Step 6: Include making charges, if any
The making charges, typically 5% of the total worth of the gold item, should be added.
Step 7: Measure the ultimate cost
Add the GST amount, import duty (if any), and manufacturing costs to the gold value to determine the ultimate cost of the gold item.
Example of 24 Carat Gold GST Calculation
Here is an illustration of how to calculate the GST rate on 24-carat gold. You pay Rs. 7,000 per gram for 10 grams of 24-carat gold. The gold came with a 6% import tariff, and the production costs for the jewellery were 15% of the gold's value.
10 grams * Rs. 7,000/gram = Rs. 70,000 is the value of gold.
GST on gold: Rs. 2,100 (70,000 * 3%).
Duty on Import: Rs. 70,000 * 6% = Rs. 4,200
Creating Charges: Rs. 10,500 (Rs. 70,000 * 15%)
5% 10,500 GST on Making Charges = Rs. 525
Rs. 2,100 + Rs. 525 = Rs. 2,625 is the total GST.
The whole cost came to Rs. 87,325 (Rs. 70,000 + Rs. 2,625 + Rs. 4,200 + Rs. 10,500).
As a result, the total cost of the gold jewellery would be Rs. 87,325, which has import duty and GST on the gold value and manufacturing costs included in it. The real computation may differ according to certain aspects, such as the gold's place of origin, additional fees, and relevant exclusions or concessions. It is a simplified example. For precise calculations and guidance, speak with a tax expert, jeweller, or World Gold Council representative.
Market Trends
The gold market has experienced a range of reactions since the GST implementation.
Enhanced Transparency: By standardizing the taxation procedure, the GST has increased the transparency of the gold market. It has reduced the opportunity for corruption and tax avoidance.
Change to Organized Sector: The GST has prompted more gold market participants to switch to organized channels, resulting in a greater industry formalization.
Impact on Demand: Price-sensitive customers' demand may have been marginally impacted by the GST-induced marginal increase in gold prices. Nonetheless, gold's long-standing attractiveness as an investment and inflation hedge maintains demand.
Impact of GST on 24 Carat Gold Prices
The retail price of 24-carat gold has somewhat increased after the GST applicability on gold. The cause is the minor increase in the overall tax burden brought about by many taxes into a single GST rate. In contrast to the possible effects of an increase in GST rates, the price increase has been modest. It's crucial to remember that several additional elements, like the jewellery's design, purity, and manufacturing costs, might affect the final retail price of gold jewellery. Even though GST has somewhat raised prices, these other reasons are also important.
Latest Update in GST on Gold in India
The Indian government lowered customs duties on gold and silver from 15% to 6% by the Union Budget 2024–2025. The basic customs charge on gold was dropped from 10% to 5%, while the Agriculture Infrastructure and Development Cess was lowered from 5% to 1%, bringing the total customs duty on gold down from 15% to 6%. The total taxes on gold and silver, including GST, were previously 15%; however, this change in customs duty and cess has essentially lowered them to 6%. The new strategy caused a week-long decline in domestic gold prices.
Conclusion
Whether buying jewellery, investing in digital gold, or operating a gold business, GST on gold impacts everyone. The overall cost is increased by a 3% GST on the value of the gold. At the same time, there is a 5% GST on the jewellery-making expenses. You can better plan your purchases if you know these GST rates and how they are determined. Using incentives like the input tax credit and adhering to GST regulations can help firms save money. Since gold is still a popular investment in India, it's critical to comprehend GST to make informed and economical choices. Be well-informed, do your math, and maximize your gold investments.
FAQ
Q1. How much GST is applicable to 10 grams of gold?
10% of the value of 10 grams of gold is subject to GST. For instance, GST would be Rs. 1,500, minus manufacturing expenses, if 10 grams of gold were worth Rs. 50,000.
Q2. What is the difference between 24 carat and 916 gold?
The phrase "916" refers to 22-carat gold, which is 91.6% pure, whereas 24-carat gold is 100% pure gold. Other metals, such as copper or silver, are added for durability, making up the remaining 8.4%.
Q3. What is the import duty applicable to 24 carat gold in India?
The overall customs tariff on gold was lowered from 15% to 6% in the Union Budget for 2024–2025. This decrease includes a 5% customs duty and a 1% social welfare surcharge.
Q4. What is the 24 Carat gold GST rate in India?
In India, 24-carat gold is subject to 3% GST. This price is constant for all 24-carat gold varieties and can apply to gold jewellery and coins. For instance, if you pay Rs. 50,000 for a 24-carat gold coin that weighs 10 grams and add Rs. 2,500 for a 5% production charge, the total value amounts to Rs. 52,000. The total cost will be Rs. 54,075 after the GST of Rs. 1,575 (3% of Rs. 52,500) is applied.
Q5. What is the 22 Carat gold GST rate in India?
In India, 22-carat gold is subject to a 3% GST tax. This pricing applies to 22-carat gold jewellery and ornaments, including gold coins and other goods. For example, if you pay Rs. 1,50,000 for a 50-gram, 22-carat gold necklace and add a 5% manufacturing charge (Rs. 7,500), the total amount will be Rs. 1,57,500. The ultimate cost will be Rs. 1,62,225 once the GST of Rs. 4,725 (3% of Rs. 1,57,500) is deducted.
Q6. What is the 18 Carat gold GST rate in India?
In India, 18-carat gold is subject to a 3% GST levy. This rate applies to jewellery, coins, and other gold products made from 18-carat gold. For instance, if you pay Rs. 40,000 for a 20-gram, 18-carat gold bracelet and add Rs. 2,000 for a 5% manufacturing charge, the total value amounts to Rs. 42,000. The total cost will be Rs. 43,260 once the GST of Rs. 1,260 (3% of Rs. 42,000) gets deducted.
Q7. Does the GST rate on gold vary according to carat (such as, 22k vs. 24k gold)?
Regardless of whether the gold is 22-carat, 24-carat, or of any other purity, the GST tax on gold is 3%.
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