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ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The GST on gold and gold jewelry is set at 3% on the value of the gold, along with a 5% GST applied to the making charges for gold jewelry.
The taxpayers in our country are very well aware of the GST, or Goods and Services Tax, levied on the sale or purchase of almost all goods and services. Just like any other item, specific GST rates are applicable on the sale or purchase of gold, commonly termed the gold GST rate.
Whether you’re picking out a stunning necklace or investing in gold coins, GST plays a role in determining the final prices you pay. Let’s break down how GST impacts your gold purchases, including the current GST rate on gold and jewelry, so you can make informed decisions before your next purchase.
In India, purchasing gold comes with a GST rate of 3%, which is divided equally between Central GST (CGST) at 1.5% and State GST (SGST) at 1.5%. For example, if you’re buying gold worth ₹20,000, the GST on that purchase would amount to ₹600. This 3% GST rate applies not only to gold jewelry but also to the purchase of gold coins or bars.
Before the implementation of GST, gold transactions were subject to a 1% Value Added Tax (VAT) and a 1% service tax. The introduction of the 3% GST replaced these earlier taxes, effectively raising the tax burden on gold purchases. Some experts believe that this increase in taxation through GST was designed to discourage excessive gold imports into the country, aiming to reduce India’s reliance on imported gold and improve the country’s economic balance.
Unsurprisingly, a large quantity of gold sold or purchased in India is imported from other countries. The GST rate on the import of gold is currently set at 3%. This rate applies to most gold imports and is levied on the value of gold imported into the country. Apart from GST, other GST rates applicable on gold are:
Additional Customs Duty (CD): In addition to GST, an additional customs duty, also known as customs duty (CD), applies to gold imports. The rate of customs duty varies depending on the purity and form of gold being imported. For example, the customs duty rate is 10% for non-refined gold bars.
Integrated GST (IGST): In cases where gold is imported for commercial purposes, an integrated GST (IGST) is also applicable. The IGST rate is usually aligned with the basic GST rate of 3%.
When the making charges for gold jewelry are listed separately on your purchase invoice, a GST rate of 5% applies, consisting of 2.5% SGST and 2.5% CGST, but only on the making charges. This 5% GST rate also applies to repair charges for gold jewelry in India.
This 5% GST rate is a reduction from the original 18% rate that was in place when GST was first introduced in 2017. It is also lower than the previous 12% tax on gold making and repair services before GST came into effect.
With gold being not just a precious metal but also a cultural and economic symbol, implementing GST brought about a series of adjustments and recalibrations in how gold is taxed and traded.
Before GST, gold was subject to various taxes, including VAT, excise duty, and customs duty. However, with the advent of GST, these multiple taxes were amalgamated into a single, comprehensive tax regime. Gold now falls under the GST regime with a fixed tax rate, which replaced the previous complex tax structure.
| |
|
| Import of gold |
12.5% customs duty on the value of gold imported |
| Gold jewelry-making charges |
5% GST on making charges |
| GST on Gold |
3% on the value of gold purchased |
Here is an easy-to-understand example of how GST is calculated on gold transactions:
If you’re purchasing gold jewelry valued at ₹50,000 and add the Customs Duty (12.5% of the base amount) as ₹6250, the overall transaction amount would be ₹56,250. The GST applied to this transaction would be calculated at 3%, resulting in a GST charge of ₹1,688.
Currently, gold investments in India, whether digital or paper, are subject to a GST rate of 3% based on the invested amount. For instance, if an individual invests ₹10,000 in digital gold, 3% GST will be subtracted, leaving ₹9700 invested. This GST levy constitutes a one-time charge levied at the time of investment. Gold Exchange Traded Funds (ETFs) or Gold Mutual Fund purchases in India are currently exempt from GST.
However, GST is not the sole charge applicable to digital gold investment in India. Additional fees, which may vary across investment platforms, could include transaction costs, trustee fees, maintenance charges, storage fees, processing fees, and others. Typically, these charges are encompassed within the spread, denoting the disparity between digital gold’s buying and selling prices on the platform.
Understanding the GST rates applicable to the purchase of physical gold is essential for both consumers and businesses involved in the gold trade. The prices have a different impact on customers and businesses.
For consumers purchasing physical gold for personal use, the 3% GST rate adds to the overall cost of acquiring gold. Consumers need to be aware of the GST implications when making gold purchases, as it affects their final price.
Understanding and complying with GST regulations is crucial for businesses involved in the gold trade to ensure smooth operations and tax compliance. Businesses need to calculate and collect GST on gold sales accurately according to the applicable rates.
Compliance with GST regulations is essential for consumers and businesses purchasing physical gold. It’s advisable to keep abreast of any changes or updates to GST rates and regulations related to gold purchases to avoid penalties or non-compliance issues.
The gold industry emerged as one of the most profoundly impacted sectors affected by this overhaul. The transition from a complex web of taxes to a unified tax regime under GST brought about several changes and implications for all stakeholders involved. Here are several ways in which the gold GST rate in India has impacted the gold industry:
GST is typically levied on gold jewelry as a flat tax or as a percentage of the gold’s value. Consequently, jewelers’ making fees often vary, influencing the overall GST on gold ornaments and coin purchases.
The implementation of GST increased the cost of gold. With tax rates rising from 1.2% to 3%, gold became more expensive, leading to a decline in demand for the precious metal. This decrease in demand, spurred by higher prices, has also affected the liquidity of gold investments.
Gold dealers must document each transaction under the GST system. This requirement is expected to foster greater transparency and accountability within the industry. Only 30% of the gold industry falls under the organized sector. The introduction of GST is also anticipated to deter tax evasion, as the imposition of higher charges might incentivize some sellers to resort to smuggling or selling gold without proper documentation.
During the 31st meeting of the GST Council, it was announced that licensed jewelry exporters would be relieved from paying GST when acquiring gold supplies. This measure is intended to enhance the global competitiveness of India’s gold export sector by alleviating the GST burden on jewelry exporters.
In contrast, licensed jewelers can claim a 2% input tax credit (ITC) in GST on the costs associated with jewelry manufacturing. Consequently, this exemption primarily advantages domestic consumers and gold jewelry exporters.
Before September 13, 2022, by CGST Rule 138(14), the transportation of gold in any form, including jewelry, goldsmith’s articles, and related items (Chapter 71), did not necessitate the generation of an e-way bill. Consequently, irrespective of the GST registration status of the gold recipient or supplier, gold could be transported without the requirement for an e-way bill.
However, a significant shift occurred on September 13, 2022, with the National Informatics Centre (NIC) unveiling a dedicated online platform designed to generate e-way bills tailored for transporting gold, gold jewelry, and precious gemstones by state-provided information.
The impact of GST on gold jewelry in 2024 reflects a complex interplay of economic, regulatory, and consumer factors. While GST has brought challenges and adjustments for the gold jewelry industry, it also presents opportunities for growth, innovation, and enhanced market transparency. By understanding and adapting to the implications of GST, stakeholders can navigate the evolving gold jewelry market and contribute to its sustainable development in the years to come.
1
In India, gold is subject to a GST rate of 3%.
2
Hallmark gold jewelry is also taxed at the same rate of 3% under GST regulations.
3
Yes, GST applies to digital gold transactions at a rate of 3%.
4
No, input tax credit benefit is generally not available for gold purchases.
5
No, the GST rate on gold remains consistent regardless of its purity.
6
Yes, the GST rate on gold is uniform across India, so you pay the same GST rate regardless of your location in the country.
7
No, gold is taxed at a lower GST rate of 3% in India.
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Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
