GST on Gold in 2025: Latest Rates, Rules & Impact on Buyers

GST on Gold was introduced in 2017 under the GST (Goods and Services Tax) regime. As a result, the purchase of gold, whether in the form of jewellery, coins, or bars, has been subject to a specific GST rate.

Even though this has increased the overall price of gold, paying GST is now a standard part of the transaction. Notably, some of the gold investment schemes are exempt from GST. Learn in detail about the GST rate applicable to gold here before you make a purchase. 

What Is GST on Gold?

Purchase of gold attracts GST (Goods and Services Tax), followed by gold jewellery making charges and import of gold. However, the GST rates for each category of transaction vary significantly. 

Notably, you do not have to pay GST if you sell off old gold and use its proceeds to purchase new jewellery. In other words, the exchange of old gold to purchase new gold does not attract taxes.

Here is an example to illustrate the differences in gold purchases before and after GST implementation:

Impact of GST on Gold 

Here is how GST implementation has impacted Gold:

• Impact on Gold Import: While the GST introduction on gold has reduced its demand and liquidity of investments, it has facilitated benefits such as the Free Trade Agreement with countries, including South Korea. GST-registered importers can ship gold without paying an additional customs duty of 10% after the GST introduction. 
• Influence on Gold Jewellery: The GST on gold making charges is set at 3%. Since making charges can vary among different gold-selling brands, the amount of GST you pay will depend on both your purchase amount and the specific making charge applied. Additionally, the introduction of GST has contributed to an increase in gold prices due to rising international rates.
• Impact on Organised and Unorganised Sector: GST regulations mandate gold dealers to maintain proper records of transactions. It boosts transparency with the government and accountability of the dealer. However, as merely 30% of these dealers are in the organised sector, there are challenges pertaining to record keeping.

Calculation of GST on Gold

Here is the formula to calculate the price of gold with GST for gold jewellery:

(Price of gold jewellery * weight of gold in grams) + making charges + GST on gold at the rate of 3% on (price of gold + making charges)

Availability of ITC for GST on Gold Businesses

Gold merchants and jewellers can claim an input tax credit (ITC) on the purchase of raw materials such as gold and additional job work charges. Even though gold merchants are liable to pay taxes under a reverse charge mechanism for the supply of goods from unregistered dealers, they can raise an ITC claim.

GST Percentage for Gold Making Charges

If gold jewellery making charges are mentioned separately on a purchase bill, a 5% GST rate applies. This includes a 2.5% CGST (Central Goods and Services Tax) and a 2.5% SGST (State Goods and Services Tax). In addition, repairing gold jewellery attracts a 5% GST.

How Does Gold GST Rate Affect Gold Loans?

The introduction of GST has significantly impacted gold loans in India. Since the implementation of GST has increased the price of gold, the value of gold used as collateral for these loans has also risen. As a result, lenders are now considering the increased value, including GST, when determining the loan-to-value ratio.

Borrowers can thus receive a higher loan amount against their collateral. Nevertheless, the interest rate on gold loans remains unaffected by the GST implementation in India. As a borrower, you need to ensure that your gold valuation is undertaken accurately for seamless disbursal of loans.

GST on Gold Investment Schemes

Gold investment schemes include ETFs (Exchange Traded Funds), mutual funds and sovereign gold bonds. It further includes digital gold instead of physical gold. Gold ETFs, gold mutual funds and sovereign gold bonds are exempted under GST. However, investors need to pay capital gains tax on their capital assets. 

In the case of sovereign gold bond, as an investor, you need to pay an 18% GST on the brokerage amount. For digital gold investments, the GST rate is the same as the physical gold GST rate, which is 3%. 

GST on Gold Exemptions

Based on the 31^st GST Council meeting, a GST exemption was declared on the supply of gold. If a notified agency supplies gold to a registered dealer, he/she can avail this exemption. It aimed to reduce the tax burden of gold jewellery exporters and promote gold exports from India in the international market.

Notably, making charges on gold jewellery attracts a 3% GST. Registered jewellers can claim an input tax credit on their expenses to reduce their tax burden.

Things to Remember Before Buying Gold Jewellery

Here are the things you need to consider while purchasing gold jewellery:

• You should purchase hallmarked or BIS (Bureau of Indian Standards) certified jewellery.
• Gold price varies based on the purity and fineness. For instance, 24 Karat gold has a higher price compared to 22 Karat or 18 Karat gold.
• Stones embedded in gold jewellery are priced and taxed separately under the GST regime.
• Gold price changes each day based on demand and supply, currency fluctuations and import duty. 

Final Words

GST on Gold in India is 3% of the gold value. However, making charges of gold jewellery attracts a 5% GST in the country. Nevertheless, gold ETFs, sovereign gold bonds and gold mutual funds are exempt from GST.

If you want to multiply your wealth without paying GST, you can consider investing in fixed deposits. Stable Money is a top platform that allows 24*7 fixed deposit booking with its partnered banks and NBFCs (Non-banking Financial Corporations), with zero waiting time.