GST on Gold: GST Rate on Gold Purchase, Jewellery, Coins, Biscuit & Bar

Gold is not just a precious metal in India—it’s a cultural symbol, an investment, and a major part of the jewellery and financial sectors. India is one of the largest consumers of gold globally, accounting for around 700–800 tonnes annually (as per World Gold Council data). With such a massive demand, gold is naturally under the radar of the Goods and Services Tax (GST) regime.

This article explores the applicable GST rates on gold in various forms—from gold jewellery to coins, bars, and biscuits—and how GST impacts the overall pricing and compliance landscape.

Understanding GST on Gold: Overview

When GST was implemented on 1st July 2017, it replaced several indirect taxes such as VAT, service tax, and excise duty. For the gold sector, GST aimed to bring uniformity in tax rates and reduce cascading tax effects.

Unlike regular goods that attract 18% GST or more, gold is taxed at lower GST rates to ensure affordability and reduce black-market transactions.

Current GST Rates on Gold (As of 2025)

1. GST on Gold Purchase (Raw Gold, Coins, Bars, Biscuits)

When you purchase raw gold—be it in the form of bars, coins, or biscuits—a flat GST rate of 3% is applicable on the transaction value.

Example: If you buy a gold bar worth ?1,00,000, the GST payable is ?3,000.

Points to Note:

There’s no GST distinction between 22K, 24K, or 18K gold. Gold coins (including government-minted) also fall under the 3% GST bracket. Gold ETFs or digital gold may involve slightly different tax structures (GST on platform/service fees).

2. GST on Gold Jewellery

Gold jewellery attracts 3% GST on the value of gold used, and an additional 5% GST on the making charges.

Example:
Suppose you purchase a necklace where:

If gold value = 80,000Rs, and making charges = 10,000Rs; then,

1. GST on gold: 80,000Rs × 3% = 2,400Rs
2. GST on making charges: 10,000Rs × 5% = 500Rs
3. Total GST = 2,900Rs

Bundled vs. Separate Billing:

If making charges are included in total price, the GST applicable is 3% on the whole amount. If billed separately, 3% applies to gold value and 5% to making charges.

3. GST on Old Gold Jewellery Exchange

Here are 5 important points on GST on Old Gold Jewellery Exchange explained within 200 words:

1. No GST on Exchange by Individuals: When an individual exchanges old gold jewellery for new, it is treated as a second-hand personal item sale, which is exempt from GST. The seller (customer) is not required to pay GST on the old jewellery they provide.
2. GST Applies Only on Value Addition: Jewellers are required to charge GST only on the value of the new jewellery minus the value of old gold. This means GST is levied solely on the net difference or the additional amount paid by the customer.
3. Standard GST Rate on Gold: As of 2025, the GST rate on gold jewellery remains 3% on the value of gold and 5% on making charges if billed separately. If making charges are bundled, a flat 3% GST applies to the net amount.
4. Input Tax Credit (ITC): Jewellers cannot claim ITC on gold received from customers in exchange, as it is not a supply from a registered dealer.
5. Documentation and Invoice: A proper tax invoice must be issued by the jeweller for the new item sold. The old gold value is shown as a deduction or part of a buy-back scheme.

Example:

1. New gold item = 1,20,000Rs
2. Old gold exchanged = 40,000Rs
3. GST = 3% on 80,000Rs = 2,400Rs

4. GST on Import of Gold

Gold imports into India attract multiple duties. While Basic Customs Duty (BCD) is typically 12.5%, an additional Agriculture Infrastructure and Development Cess (AIDC) of 2.5% applies. Over and above these, Integrated GST (IGST) at 3% is levied under the GST framework. IGST is applicable on the total value (including BCD and AIDC). Importers can claim Input Tax Credit (ITC) on IGST paid. However, BCD and AIDC are non-creditable. Gold imports are strictly regulated, and only licensed importers (like banks and MMTC) can legally import under specified quotas. Misdeclaration or evasion attracts severe penalties.

Impact:

This high upfront tax (15% + 3%) increases the landed cost of gold and indirectly affects retail gold prices in the domestic market.

5. GST Compliance for Gold Dealers & Jewellers

Gold dealers and jewellers must follow strict GST regulations involving registration, invoicing, and return filing. Proper tax classification, accurate record-keeping, and adherence to GST norms are critical to avoid penalties.

Key Compliance Requirements:

1. GST Registration – It is mandatory if turnover exceeds ?40 lakhs (?20 lakhs for special category states).
2. Applicable GST Rates – The dealers or jewelers must bear 3% on gold value and 5% on making charges (if charged separately).
3. Regular Return Filing – Timely filing of GSTR-1 and GSTR-3B is compulsory for all jewelers and dealers.
4. E-Way Bill Requirement – E-way bill is mandatory for goods movement exceeding ?50,000. It is applicable for gold as well.
5. Accurate Records & Invoicing – They have to maintain GST-compliant invoices and detailed stock records.

 Pre-GST vs. Post-GST Gold Taxation (Comparison)

Net Impact: The effective tax burden has increased slightly post-GST, but compliance has improved and transparency has increased in the gold trade.

Availability of Input Tax Credit (ITC) for GST on Gold Business

Under the GST regime, businesses engaged in the gold trade—such as jewellers, gold dealers, and bullion traders—are eligible to claim Input Tax Credit (ITC) on gold-related purchases, subject to compliance. ITC allows registered businesses to offset the GST paid on inward supplies (like raw gold, tools, consumables, or services) against the GST collected on outward supplies (sales of jewellery, coins, bars, etc.).

For example, if a jeweller purchases raw gold and pays 3% GST, and later sells jewellery while charging GST to the customer, the tax paid on purchases can be claimed as credit. Additionally, ITC can be claimed on services like making charges, design consultancy, packaging, logistics, and even shop rentals—if GST is applicable and the invoice is valid.

However, ITC is not allowed if the goods or services are used for personal consumption or if the seller opts for the Composition Scheme. Also, ITC cannot be claimed on blocked credits like motor vehicles, catering, or employee perks unless used directly for business.

Proper invoicing, timely filing of GST returns (GSTR-1, GSTR-3B), and GST-compliant vendor records are essential to avail and retain ITC benefits in the gold business.

Key Takeaways

• 3% GST is applicable on all types of gold: bars, biscuits, coins, and jewellery.
• 5% GST applies to making charges (if billed separately).
• Gold importers also pay 15% basic customs duty + 3% IGST.
• Exchange of old jewellery incurs GST only on the net difference.
• GST has brought standardization, transparency, and helped reduce unregulated gold trading.

Looking to Buy or Sell Gold Legally?

Ensure your jeweller is GST registered and issues proper tax invoices. This helps with authentication, resale value, and compliance.

Conclusion

GST on gold is structured to balance affordability and tax compliance. While the overall cost for consumers may have risen slightly, the transparency and reduction in tax evasion are long-term benefits. Whether you're a retail buyer, investor, or jeweller, understanding GST on gold ensures smarter, compliant transactions.

FAQs on Gold Bars and Jewelry

1. Is GST applicable on the exchange of old gold jewellery in India?

Yes, GST is applicable on the exchange of old gold jewellery in India. The tax is levied on the value of the new jewellery purchased, minus the value of the old jewellery that is being exchanged.

2. What is the GST rate on gold jewellery in India?

The GST rate on gold jewellery is 3% under the Goods and Services Tax Act. This applies to both new and exchanged gold jewellery, but the rate is applied to the net value after considering the exchange value.

3. Do I have to pay GST if I exchange old gold jewellery for new jewellery?

Yes, you will have to pay GST on the value of the new jewellery purchased after deducting the exchange value of the old jewellery. The GST is calculated on the price difference.

4. How is GST calculated when exchanging old gold jewellery?

GST is calculated on the net price of the new jewellery after deducting the value of the old jewellery. For example, if you exchange gold worth ?20,000 for a new piece of jewellery costing ?40,000, the GST will be applicable on ?20,000 (the price difference).

5. Are there any exemptions on GST for old gold jewellery exchanges?

No, there are no exemptions specifically for the exchange of old gold jewellery. However, the tax is applied only to the value of the new jewellery, not the old jewellery.

6. Do I need to provide proof of purchase for old gold jewellery exchange?

While not mandatory, providing proof of purchase for the old gold jewellery can help determine its value and reduce disputes regarding the exchange value. However, GST is still levied on the net value of the new purchase.

7. What happens if the exchanged old gold is not in good condition?

If the old gold is in poor condition, its value may be lower, which will reduce the amount on which GST is applied. The GST will still be calculated on the final transaction value, which includes the adjusted price of the new jewellery after accounting for the old gold's condition.