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Goods and Services Tax (GST) on Gold - Complete Info 2023

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May 17, 2023


What’s Inside

The GST or Goods and Services Tax, which took effect on 1st July 2017 was a revolutionary step in the Indian taxation system. It encompassed all manufacturers, investors, and consumers since it replaced all taxes like the Value Added Tax (VAT), Customs and Central Excise Duties.

The Union Ministry of Finance proposed three tax slabs in this new regime for tax. Initially, the GST rate for gold was 3%, and an 8% additional tax was levied on jewellery-making charges. Subsequently, this tax on making charges was lowered to 5% as various groups raised concerns.

GST Rate on Gold in the post-GST Regime

Gold prices in the post-GST era experienced several fluctuations, and analysts opined that this tax would reduce gold demand due to higher taxation.  Despite this additional tax burden, gold prices have been rising due to unstable market conditions.

The gold prices have risen owing to retained import duties of 10% besides the 3% GST on gold rates and the 5% GST payable on making charges. However, gold prices post-GST have steadily risen because of higher demands in foreign markets. Moreover, the plunging value of the US dollar resulted in higher trading of the metal and increased its value.

Long-term outlooks on the Indian gold rate post-GST, however, are positive even though there are fears of spiralling gold smuggling owing to the high costs of buying this noble metal. The Indian jewellery sector is somewhat content with the prevailing gold prices post-GST, even though average consumers complain about spiralling costs.

How Much GST on Gold?

The following GST is applicable on the purchase of gold:

  • GST on Purchase of Gold: All gold and gold-based jewellery was initially taxed at 3% flat, and the consumer would have to bear it.
  • GST on Making Charges: An additional tax of 5% was levied as jewellery-making charges. However, no tax is levied on the making charges, accounting for nearly 12% of the gold cost.

The initial tax on jewellery making was 18%, reduced to 5% now. The high tax would have fueled the consumer’s burden as the latter would have had to bear it. The initial 18% rate also led to the consumer paying nearly 4% tax. The reduction has been welcomed wholeheartedly by all Indian jewellery bodies, which feel that this rate reduction will lead to higher turnovers in the market for gold manufacturing.

How to avoid paying GST on gold-based jewellery?

This is possible by reselling old gold. The amount does not attract tax, provided it is used to purchase new jewellery. Before GST, a 3% charge was made on selling old gold even though new gold was bought.


As things stand, it may thus be seen that before the implementation of GST, there was a 1% VAT and Sales Tax, which have been abolished. However, taxes on making charges that were non-existent in the pre-GST era have gone up to 5%. The import duty of 10%, which existed in the pre-GST era, continues to exist. Finally, the GST rate on gold value, which was nil earlier, is now 3%.

Fi, a money management platform, can simplify your decision-making process before purchasing gold by providing valuable insights into your finances. Fi's Analyser tracks your expenses by merchants/brands, categories such as food or entertainment, and daily/monthly time frames. This can help you identify potential savings opportunities and budget accordingly. Additionally, Fi can provide helpful nudges to maximise your savings and investments, which could ultimately help you purchase gold at the best possible price. The Insights Hub on Fi's Analyser can also provide you with your credit score, which can be crucial in determining whether to finance your gold purchase or pay cash. By utilising Fi's platform, you can make informed decisions and ensure that your gold purchase fits seamlessly into your overall financial plan

Frequently Asked Questions

1. What are the new GST rules on gold?

The GST levied on any gold jewellery is on its making charges or as a pre-determined percentage of gold's overall value. Usually, 3% GST is imposed on gold-based jewellery while 5% GST is levied on its making charges.

2. Does gold have 12% GST?

No, gold does not fall in the category of items attracting 12% GST.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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