GST on Silver: Understand the Tax Rates, HSN Codes and More

Silver is a metal which is often referred as “poor man’s gold”. Though it is not that much costly as “gold”, it holds a significant cultural and economic value in India. But have you ever heard about GST on Silver while purchasing this metal? If no, then don’t worry. There are many buyers including investors, jewellery lovers or first-time purchasers who are unsure about how this tax works. Here in this blog we will be discussing everything you need to know about GST on silver in India. The blog cover rates, HSN codes, how GST are applied to different types of silver, input tax credit, etc. Read to know more.

What Is GST and Why Does It Matter for Silver?

The GST has replaced complex indirect tax regimes which were previously followed in India, such as VAT and excise duty, with a single tax. In the case of silver, GST has implied clarity for the buyers. Previously while purchasing silver a buyer has to go through various taxes under the older systems. They are now operating within a regime that is straightforward and standardized.

The best thing about GST on Silver is that it helps in treating silver, like all other goods, and hence, if one is purchasing raw silver to manufacture or buying a decorative silver coin, the GST will be applied and followed in accordance with defined HSN. It actually means the same tax logic holds good across its different forms.

What is the Present Rate of GST on Silver?

The time when GST was not implemented, the tax on silver was calculated as 1% excise duty and 1% VAT. However, based on state regulations, this tax structure used to vary.

After GST is introduced, the application of these multiple taxes on silver was reduced and a flat GST rate was implied. The current rate of GST on silver is 3%.

Silver, in semi-manufactured, raw or powder form, has a GST of 3%. In case of silver bars also a GST of 3% is implied. Silver coins sold by Non-Legal Tender are also taxed at 3% GST.

In case of manufacturing silver jewelry and other silver items, the metal is levied at 3% only, however after including the labour charges the GST rate can increase to 5%.

Importantly, under the reforms of GST 2.0 effective from the date of September 22, 2025, the GST Council has decided to keep the same rates for silver.

GST Rates on Silver with HSN Code

Businesses are allowed to follow tax rules under GST as per the standardised HSN (Harmonised System of Nomenclature) code 7106 for silver products. However, the HSN codes varies in case of different types of silver products, like silver sheets, silver powder, silver sheets, silver bars, etc. This will help in avoiding confusion and simplifying tax filling.

Check the table for GST on Silver rates along with HSN Codes.

All these taxes are implied on silver metal under the GST rule including CGST, SGST, UTGST and IGST.

How GST on Silver is Calculated?

Here let us take a simple example to understand how GST on Silver is calculated:

First Determine the base value: Suppose you as a buyer purchasing a 100-gram silver bar, and the rate is Rs. 5,000 per 10 grams, base value = Rs 50,000.

When you calculate GST: At 3%, the amount of GST = Rs. 50,000 × 0.03 = Rs. 1,500.

Total cost will be Rs. 50,000 + 1,500 = Rs. 51,500.

Now in case if you are buying silver jewelry then the making charges will be calculated separately:

Assume that silver value is Rs. 20,000 and GST@3% = Rs. 600

Making charge is Rs. 2,000 and GST@5% = Rs. 100

Then the total GST for the jewellery piece will be 700, and final cost will be Rs. 22,700.

In case if the making charge is not billed separately, i.e. a single combined price will be calculated, then the whole invoice may will only include the 3% GST.

 Input Tax Credit (ITC on Silver)

Suppose you are a silver manufacturer and you are interested to understand the Input Tax Credit (ITC).

You can claim ITC for purchases of silver that go into manufacturing or trading.

It means that the 3% GST you are paying while purchasing raw or semi-processed silver will be adjusted against the GST that you can collect on selling silver products. This will help in reducing the effective tax burden for registered businesses who are dealing with silver. But if you are a retail customer of investor who are purchasing silver exclusively for personal use, in that case you cannot claim ITC. Thus we can say that ITC is a great advantage for businesses dealing with silver. Personal the 3% GST is a cost.

Impact of GST 2.0 Reforms on Silver (2025)

GST 2.0 was a major reform. The GST Council had transformed the tax slabs in September 2025, but importantly GST on silver remained the same:

The GST Rate stayed at 3% for the metal.

5% of making charges on jewellery also stays the same.

Whether you are buying silver bars, coins or ornaments, the previous structure will remain the same.

This stability offers buyers and traders with clarity and predictability, specifically in a period of broader tax reform.

Why some people want Reduction in the Rate of GST on silver?

Everyone is not pleased with this 3% GST Rate. Industry associations, like the Gem & Jewellery Domestic Council (GJC), has asked for a change. As per them 3% is too high rate on silver ornaments, and the rates should be as low as 1.25%. As per them Lower taxes can make silver metal more affordable and will cause a reduction in the black-market trades.

Practical Tips for Buyers

The following are some useful tips for individuals who are purchasing silver for investment or personal use:

1. Request a clear invoice

Properly check if the making charges on silver are listed separately. It will impact the amount of GST one pays. Verify the base price of silver.

1. For investors:

Always buy silver from registered silver dealers or refiners so your GST is legitimated and accounted for.

You can also avail the services of a GST entity for the recovery of ITC. (However it is applicable to businesses, not individuals.)

2. For buyers of jewelry:

If possible you can negotiate the structure of the invoice (whether combined or separate).

You also need to be aware of import duty. Remember that GST is only a part. There will be customs duty imposed on imported silver. The final cost will include the base price of silver along with duty and GST.

2. Keep yourself informed about policy changes

The rate of GST on silver remained the same in the year 2025, but tax policies will change. So you will have to monitor the decisions of the GST Council.

Some Common Misconceptions

1. Silver doesn’t have GST

Incorrect. It has 3% GST on all forms of silver such as silver bars, silver coins, silver jewellery including 5% on making charges.

2. ITC is available for everyone

This is a major misconception among many. Remember that businesses registered under GST can claim ITC for silver purchases. In case if you are buying just for collecting or gifting, then there will be no ITC for you.

3. GST on Silver was Reduced in the new GST 2.0

No. After the reform of GST tax slabs in month of September 2025, GST on silver rates have remained the same. Remember that GST is only a part of the cost. The price of silver also depends on global rates, purity, customs duty, and local premiums too.

What are the Impact of GST on Silver?

Check the table below to get an idea about the impact of GST on Silver:

Conclusion

Therefore, to sum up, we can say that the Goods and Services Tax (GST) marks a major step towards a unified taxation system for silver in India. As the market are continuously evolving, so one must stay updated with these tax implications. By replacing all the central and state level taxes, 3% GST on Silver and 5% on the making charges for silver jewellery has simplified the pricing structure. If you require any information on GST updates or need assistance for GST registration of your business, get in touch with Online Legal India.

FAQ

1. What is the GST rate for Silver in India?

The GST Rate on silver is 3% in India. This is applicable to all types of silver. Previously before the implementation of GST, silver was taxed under VAT and excise duty.

2. Can I Claim GST on Silver?

Business taxpayers who are registered under GST can claim ITC for silver purchases for creating silver jewellery items. However, individuals who purchase silver cannot obtain GST refunds even if they are using silver as a personal asset.

3. What Percentage of Silver is Tax-Free?

There is no tax exemption in case of silver purchases. No matter what form of silver you are purchasing, it is subjected to a 3% GST and custom duties if it is imported.

4. Is GST on Silver applicable on the import of the metal in India?

Yes, GST is applicable when silver is imported. In case of importing silver, the purchaser has to pay 3% of GST and 10% of customs duty.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.