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GST on Gold: Analyzing Effects of Gold GST Rate in India 2024

calendar15 Jun, 2024
timeReading Time: 5 Minutes
GST on Gold

Gold has always held a special place in the hearts of the Indian people. It is considered an auspicious metal for various Indian cultural occasions. Gold is considered an essential part of our culture and our finances, too. Since the implementation of the Goods and Services Tax in India in 2017, along with other goods and services, there has been a noticeable impact of GST on gold as well. It is vital to understand the impact and GST rates on gold.

Gold jewellery has several business uses in addition to personal ones. It is a trustworthy and steady way to make investments in India. The nation continues to be the world’s biggest purchaser of gold. Nonetheless, the gold market has been significantly impacted by the adoption of GST. GST is applied to this valuable metal at several stages, including production and purchase. GST registration is essential for those dealing in gold in India.

This blog included details on the GST rates, the impact GST had on gold, the various exemptions of GST on gold, ITC available on GST on gold and other pertinent details.

Understanding GST on Gold

GST is charged on various forms of gold in India. Let’s take a look at how GST affects the import of gold, the gold jewellery, the making charges, the gold when purchased digitally and other different scenarios.

Understanding GST on Gold

Import of Gold

There is no GST levied on the international import of gold in India. The IGST is imposed on the import of gold from one to another. In place of the GST, the customs duty is levied for the import of gold when the gold is imported from outside India. There is a 10% customs duty on the gold bars along with raw gold/semi-finished gold.

Gold Jewellery Making Charges

The GST on the making charges of gold jewellery is 5% when shown on the bill separately. The SGST and the CGST are both charged at 2.5%, which comes to 5% as a whole. In the case of gold jewellery repair, this 5% is also levied as GST. Previously, the tax levied on the making charges was 18%, which was after the implementation of the goods and services tax. The tax rate on the repairing charges before the GST was 12% which is also more than the current 5% that is levied for both repairing and on making charges.

GST on Digital Purchase of Gold

The rate of GST on the digital purchase of gold is the same as the GST on the physical purchase of gold, which is 3%. Investing in gold has always been quite a popular investment in India. Recently, investing in digital gold is also gaining popularity in India. There is no GST on the purchases of gold mutual funds or gold ETFs, i.e. Exchange Traded Funds. The fees of the trustees, charges of maintenance, and costs of transactions all will apply.

GST on Physical Gold

A 3% GST is levied on physical gold, including gold coins, jewellery, bars, and biscuits. This 3% is applied along with the 5% making charges, which depend on the style and craftsmanship. The 5% is payable by the gold buyer.

GST on Gold Loan

The interest rates on the gold loan depend on various other key aspects, such as the amount of the mortgage, the quality of the gold, the quantity of gold, and the period of repayment. The GST rates on the gold loan can vary from 2% to 3%.

GST Rates on Gold

The following are the current rates of GST on gold:

  • The GST rate on gold coins, gold bars and jewellery of gold is 3%.
  • The GST on the making charges for the gold jewellery is 5%.
  • The GST on the services of the silver and goldsmith is also at 5%.

The taxes on gold prior to the implementation of GST were:

  • VAT: The VAT was 1% prior to the introduction of GST, and it remained the same after the GST implementation.
  • GST Rate: Prior to the implementation, it was zero, and currently, it is 3%.
  • Sales Tax: The sales tax was levied at 1%, which after the GST implementation is nil.
  • Import Duty: The import duty of gold was 10% before GST implementation, which is the same after the implementation.
  • Charges on making: The tax on the making charges of gold was nil earlier and is currently 5%.

Impact of GST on Gold

Many changes have taken place as a result of the implementation of GST laws in India. Earlier, gold was taxed in various stages; now, with the introduction of GST, a unified tax system, there are many changes in gold rates. The impact of GST on gold is:

  1. There has been an increase in the price of the gold after the GST was introduced. Prior to GST, the rate was 1.2%, which now has increased to 3%. This increase has also impacted the demand for gold in the country.
  2. With the introduction of GST, there has been a considerable reduction in the cascading of taxes. Transparency has increased to a fair amount as dealers are now required to provide all the necessary details to the GST authorities. With GST, the smuggling of gold and the use of undocumented gold have also been reduced.
  3. Gold dealers can easily deal in gold because of the free trade agreement. There is no custom duty on importing gold.
  4. The implementation of GST has increased customers’ assurance. GST is a very organized system, and due to its unified structure and simplified taxes, the industry is boosting.
  5. The goods and services taxes are directly related to the country’s economic growth. There have been noteworthy changes due to the introduction of goods and service tax in India.

Exemptions of GST on Gold

At the 31st GST council meeting, a GST exemption was announced for the supply of gold to authorized jewellery exporters provided by a recognized body. This exemption aims to minimize the GST liability of gold jewellery exporters and to increase the competitiveness of the Indian gold exporting industry on the global stage.

The making charges are subject to a substantial 5% tax; however, registered jewellers are eligible for a two per cent Input Tax Credit on these expenditures. The aforementioned exception, however, is only intended to offer exporters of gold jewellery a break; domestic consumers will not receive any advantages of this exemption.

Tips for Reducing the Impact of GST on Gold

There are various factors that need to be considered before buying gold or gold jewellery. Some tips that can be adhered to are:

  • Make sure that you are buying gold jewellery that has a hallmark on it.
  • The gold Jewellery may contain other precious metals and stone, so you have to ensure the GST rate of them will be different than that of gold.
  • The gold prices change every day, so calculating the GST also has to be done on the current price.

Input Tax Credit for GST on Gold

A gold merchant or jeweller can claim a refund for the ITC paid. The Input Tax Credit paid on expenses and raw materials can also be claimed. The input tax credit can also be claimed if the gold merchant has paid taxes using the RCM for the supplies.

Conclusion

The introduction and implementation of the Goods and Services Tax in India has impacted the gold market in both positive and negative ways. The gold dealers and the customers buying gold have to understand the various implications of GST on gold. With this blog, you can get a detailed idea of the impact of GST on Gold and the current rates of GST on gold in the year 2024. With knowledge of GST on gold, consumers can make informed decisions at the time of buying. The implementation of GST on Gold has also made the purchase and selling of gold very transparent.

Frequently Asked Questions

  1. What is the GST on gold in 2024?

    The gold is levied at 3% GST in 2024.

  2. How is GST calculated on gold?

    Prior to GST, the taxes levied on gold purchases were service tax and VAT at one per cent. The rate would be 2% for purchasing the gold. Post GST, a unified system is in place, which means one tax. The rate of GST on gold is 3%.

  3. How much is the GST charged on gold in India?

    The GST on jewellery is 5%, which is at the making charges. And on gold, the GST is 3%.

  4. Can GST on gold be claimed?

    A 2% ITC (Input Tax Credit) can be claimed on gold jewellery-making charges. Only registered dealers can avail of this claim.

  5. Can I save GST on gold?

    When the exchange of old gold jewellery with the purchase of new gold jewellery occurs, the GST is not charged. So, if you want to save GST, you can exchange gold jewellery for gold jewellery.

  6. How much gold is tax-free for women in India?

    In India, a woman who is unmarried can have gold up to 250 grams, and a woman who is married can have gold up to 500 grams.

  7. How much tax is charged on digital gold?

    The tax charged on digital gold is 20%.

  8. How much is the GST charged on silver articles and jewellery?

    The Goods and Services Tax charged on the articles of silver and jewellery is at three per cent.

Read our article GST Compliance Trend That Drive Growth For Businesses

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