GST on Gold & Jewellery in India 2025: Rates, Making Charges & ITC Rules

Gold holds a uniquely significant position in Indian culture and finance. India is the world’s second-largest consumer of gold, with millions of transactions happening annually across retail jewellery shops, bullion traders, and import businesses. Naturally, the GST implications on gold are among the most searched topics on Indian tax portals. Whether you are a jeweller, a consumer buying a necklace, or an importer of gold bars, this guide covers everything you need to know about GST on gold and jewellery in 2025.

GST Rate on Gold: The Complete Breakdown

GST on gold is applied in a two-layer structure. The tax treatment differs for the gold as a raw material versus the finished jewellery:

Item	GST Rate
Gold (raw, bars, coins up to 50g)	3%
Silver	3%
Platinum	3%
Gold jewellery (making charges)	5%
Diamonds	0.25%
Customs Duty on imported gold	15% (separate from GST)

The critical point to understand here is that the GST on a jewellery purchase is NOT a flat 3% on the invoice total. The tax is applied in two parts:

3% GST on the gold value (the value of the gold content at market price)
5% GST on the making charges (the labour and craftsmanship fee charged by the jeweller)

Practical Example: Buying a Gold Necklace

Suppose you are buying a 10-gram gold necklace when gold is priced at ₹6,500 per gram:

Component	Value	GST Rate	GST Amount
Gold Value (10g × ₹6,500)	₹65,000	3%	₹1,950
Making Charges	₹5,000	5%	₹250
Total Invoice	₹70,000		₹2,200

The total GST burden on this purchase is ₹2,200 (a blended effective rate of ~3.14%). The jeweller is required to issue a GST-compliant invoice clearly bifurcating the gold value, making charges, and the respective GST amounts.

GST on Old Gold Exchange (Part-Exchange Transactions)

One of the most nuanced scenarios is when a customer brings in old jewellery to exchange for new jewellery (a common practice in India). The GST treatment here is a common source of confusion and litigation.

Scenario: Customer brings old gold worth ₹30,000 and buys new jewellery worth ₹70,000 (gold: ₹60,000, making: ₹10,000). Customer pays the balance of ₹40,000.

As per CBIC clarification, GST is applicable on the full invoice value of the new jewellery (₹70,000), not just on the net cash payment (₹40,000). The old gold exchange is treated as a separate supply of goods by the customer to the jeweller, and that reverse transaction also has GST implications.

Jewellers should ideally issue two separate documents:

Invoice for new jewellery (full GST on ₹70,000 value)
A purchase voucher for the old gold received from the customer (valued at ₹30,000, with applicable GST)

This treatment prevents any allegation of tax evasion on the gross transaction value.

Can Jewellers Claim ITC on Gold Purchases?

This is a crucial question for the jewellery trade. The answer is: Yes, jewellers can claim ITC on most inputs, but with important restrictions.

A jeweller registered under GST can claim ITC on:

Gold and silver purchased from registered bullion dealers
Tools, equipment, and machinery used in jewellery making
Packaging materials
Professional services (CA, legal)

However, jewellers CANNOT claim ITC on:

Gold purchased from unregistered suppliers (a very common scenario, especially for old gold)
Any inputs related to stock in trade before GST registration date

The restriction on ITC from unregistered suppliers is a significant practical issue for the jewellery industry, as a substantial portion of gold in the supply chain comes from individuals, temples, or informal recyclers who are not GST registered.

GST on Import of Gold

Gold imported into India is subject to multiple levies:

Basic Customs Duty (BCD): 10%
Agriculture Infrastructure Development Cess (AIDC): 5%
IGST: 3%
Social Welfare Surcharge: Applicable on BCD

The total effective tax on imported gold is approximately 18-19%. The IGST paid at customs can be claimed as ITC by the importer (if they are a GST-registered business entity).

HSN Code for Gold & Jewellery

For GST compliance, jewellers must use the correct HSN codes on their invoices:

HSN Code	Description
7108	Gold (including gold plated with platinum), unwrought, semi-manufactured or in powder form
7113	Articles of jewellery and parts thereof, of precious metal
7114	Articles of goldsmiths’ or silversmiths’ wares and parts thereof, of precious metal

Use our HSN Code Lookup tool to find the exact 8-digit HSN code for specific gold articles.

Composition Scheme for Jewellers

Small jewellers with an annual turnover of up to ₹1.5 Crore can opt for the Composition Scheme and pay a flat 1% tax (as a manufacturer) without the complexity of ITC reconciliation. However, composition dealers cannot issue tax invoices, cannot charge GST from customers, and cannot supply interstate.

For most jewellers, given the high value of transactions, the regular GST scheme is more practical.

Key Compliance Points for Jewellery Businesses

Mandatory Invoice: For any supply above ₹200 to an unregistered buyer, a proper invoice (or bill of supply for composition dealers) must be issued.
PAN for High-Value Transactions: Any sale of jewellery exceeding ₹2 Lakhs to a single buyer requires the buyer’s PAN card details to be recorded.
Hallmarking: From July 2021, BIS hallmarking is mandatory for gold jewellery. Hallmarked jewellery has a unique HUID number, which should also be mentioned on invoices.

Conclusion

GST on gold in India has brought unprecedented transparency to a sector that was historically cash-dominated. For consumers, it means predictable pricing with clear tax breakdowns. For jewellers, it means ITC benefits on most purchases, though the large informal sector remains a complication. If you are a jeweller wanting to calculate your GST liability quickly, use our GST Calculator for instant tax computation.