What Is the GST Rate on Gold? Meaning, Definition & How It Works
The Goods and Services Tax (GST) is India’s single indirect tax on the sale of goods and services, introduced on 1 July 2017 to replace a mix of older state and central taxes. Before GST, a gold buyer paid roughly 1% VAT (a state sales tax) and 1% excise duty, so the total tax worked out to about 2%.
When GST came in, the GST Council, the body of central and state finance ministers that fixes GST rates, set the gold GST rate at 3%. That is a little higher than the old regime, but far simpler for a buyer to work out on the spot.
This rate applies to every buyer of physical gold in India, from a neighbourhood jeweller to an online seller. It also applies the same way across purity levels: 24-carat, 22-carat and 18-carat gold all attract the same 3% on value, because GST taxes the transaction, not how pure the gold is.
Did You Know?
In May 2026, India raised the customs duty on imported gold to 15%, up from 6%. That duty is separate from GST and adds to the landed cost before GST is even applied (CNBC, May 2026).
How Does GST on Gold Work?
GST on gold does not work like a single flat tax on the final bill. It applies in two separate layers, and knowing both is the key to reading a gold invoice correctly.
The first layer is 3% GST on the value of the gold itself. This is worked out from the weight of the gold multiplied by the current market rate per gram.
For a purchase made within one state, this splits into 1.5% Central GST (CGST) and 1.5% State GST (SGST). For an interstate purchase, a single 3% Integrated GST (IGST) applies instead.
The second layer applies only to jewellery: a 5% GST on making charges, the labour and design cost the jeweller adds on top of the metal. Making charges are treated as a service, which is why they carry a different, higher rate than the gold itself.
By law, a proper invoice must show the gold value, the making charges, and the GST on each as separate line items, never bundled into one figure.
Pro Tip
Check that your jeweller’s bill shows gold value and making charges on separate lines, each with its own GST. A single combined “GST” figure makes it hard to confirm you have not been overcharged.
GST on Gold: Formula
The GST payable on a gold purchase has two parts, and each is calculated on a different base. Knowing the formula lets you check a jeweller’s invoice line by line instead of trusting the final total.
GST on Gold Purchase Formula: Total GST Payable = (Gold Value × 3%) + (Making Charges × 5%) Where: Gold Value = Weight of gold (grams) × Market rate per gram on the day of purchase Making Charges = Labour and design cost billed separately by the jeweller (nil for a plain bar or an unworked coin) |
Gold Value here means the cost of the metal alone, based on its weight and the day’s market rate, before any labour cost is added.
Making Charges cover the jeweller’s design and craftsmanship fee, and this is nil if you are buying a plain gold bar or a bank-issued coin with no fabrication involved.
Adding the two GST amounts together gives the total tax on your purchase.
Example With Real Numbers
Imagine Rohan, a 29-year-old software engineer in Pune, is buying a 10-gram gold necklace as a wedding gift for his sister.
Given: Gold rate: ₹11,000 per gram Gold value: 10 grams × ₹11,000 = ₹1,10,000 Making charges: ₹8,000 (billed separately) Calculation: GST on gold value = ₹1,10,000 × 3% = ₹3,300 GST on making charges = ₹8,000 × 5% = ₹400 Total GST = ₹3,300 + ₹400 = ₹3,700 |
This means Rohan pays ₹1,10,000 + ₹8,000 + ₹3,700 = ₹1,21,700 for the necklace, with the GST clearly split across the two components on his invoice.
Types of GST Treatment for Gold
Not every gold transaction is taxed the same way. The 3% headline rate covers the metal, but a few common gold products and services fall outside that simple picture.
Gold Jewellery
Gold jewellery attracts 3% GST on the gold value and a separate 5% GST on making charges. Since jewellery always involves labour and design, this is the only gold form where the second layer of tax applies.
Gold Coins and Bars
Coins and bars, including bank-issued or mint-issued ones, attract 3% GST on value alone. There are usually no making charges here, since these products are not fabricated by hand.
Digital Gold
Digital gold, bought through an app or platform backed by physical gold in a vault, is taxed the same way as physical gold at 3%. See our digital gold glossary page for how the buy-sell spread affects returns on top of this tax.
Gold Loans
The interest you pay on a gold loan is exempt from GST, since interest is treated as the cost of borrowed money, not a taxable service. Processing fees, valuation charges and similar service fees on the loan attract 18% GST instead. Gold pledged as loan collateral itself is not a taxable supply, so no GST arises when it is pledged.
Imported Gold
Gold brought into India attracts 3% IGST at the point of import, on top of customs duty, which is a separate charge and currently runs much higher than GST. A business importing gold for resale can typically claim input tax credit on the GST portion; an individual traveller cannot.
Resale of Old Gold
When you personally sell old gold jewellery to a jeweller, you do not charge GST, since you are not a registered business. When that jeweller later resells the same gold, 3% GST applies on the resale value.
Quick Comparison
| Gold Form | GST Rate | Notes |
| Jewellery | 3% + 5% | 3% on gold value, 5% on making charges |
| Coins and bars | 3% | No making charges in most cases |
| Digital gold | 3% | Same treatment as physical gold |
| Gold loan interest | Exempt | Fees on the loan attract 18% |
| Imported gold | 3% IGST | Plus customs duty, charged separately |
Key Components to Check on a Gold Invoice
A compliant gold invoice breaks the purchase into clear parts. Knowing what each one means helps you spot an error or an overcharge before you pay.
- Gold value: the weight of gold multiplied by the day’s rate per gram, before any tax or making charges are added.
- Making charges: the jeweller’s labour and design fee, billed as its own line and taxed at 5%, separate from the gold value.
- Tax split (CGST + SGST or IGST): an in-state bill splits the 3% into 1.5% CGST and 1.5% SGST; an interstate bill shows a single 3% IGST line instead.
- HSN code: gold bars generally fall under HSN 7108, finished jewellery under 7113, and gold coins under 7118. The code on your invoice should match what you actually bought.
- Hallmarking charge: the BIS hallmarking fee is usually folded into making charges, so you should not see a separate GST line for it on a retail bill.
Benefits of the Current GST Structure on Gold
- Lower than the pre-GST tax load: the 3% rate replaced a patchwork of state VAT and central excise that varied from state to state, giving buyers one predictable number instead of several.
- One rate across India: a buyer in Mumbai and an NRI shopping in Ahmedabad on a visit home pay the same 3% on gold value, which makes it easier to compare prices honestly across cities.
- Transparent, itemised billing: the two-line GST structure lets you see exactly what is being taxed, which makes it harder for a seller to quietly overcharge you.
- Input tax credit for registered jewellers: businesses buying gold for resale can claim credit for the GST they pay, which helps keep retail prices in check.
Risks and Limitations
- Overcharging on making charges: some jewellers apply 18% GST on making charges by calling it a design or styling service instead of the correct 5%, so always confirm the rate shown against the making charges line.
- No input tax credit for individuals: unlike a registered business, a personal buyer cannot claim back any GST paid on jewellery, so the full 3% and 5% are a straight cost.
- Making charges are unregulated: while the GST rate on making charges is fixed at 5%, the making charges amount itself is set by the jeweller, so two shops can quote very different fees for a similar design.
- Confusion with import duty: buyers sometimes mix up the 3% GST with the customs duty on imported gold, which is a separate, much larger tax paid by importers and reflected in the market rate, not billed to you directly at the counter.
Important
A single combined “GST” figure on a jewellery bill, or a making-charges rate above 5%, is one of the most common ways buyers end up overpaying. Ask for a line-by-line invoice before you pay.
Frequently Asked Questions
What is the GST rate on gold in India?
The GST rate on gold in India is 3% on the value of the gold, whether it is jewellery, a coin or a bar. If you are buying jewellery, a separate 5% GST applies to the making charges billed by the jeweller.
How is GST calculated on gold jewellery?
GST on jewellery is calculated in two parts: 3% on the gold’s weight multiplied by the day’s rate, and 5% on the making charges the jeweller bills separately. The two amounts are added together to get the total GST on your bill.
Is the GST rate different for gold coins compared to gold jewellery?
No, gold coins and bars attract the same 3% GST on value as jewellery. The main difference is that coins and bars usually carry no making charges, so there is no separate 5% component to pay.
What is the GST rate on gold watches?
A watch with a gold case is taxed as a watch, not as gold, so it attracts 18% GST, not the 3% gold rate. This is a common misconception: GST classification follows the finished product’s HSN code, and watches sit under a different chapter of that code than gold jewellery.
Does GST apply to a gold loan?
GST does not apply to the interest you pay on a gold loan, since loan interest is treated as the cost of borrowing, not a taxable service. Processing fees, valuation charges and similar service charges on the loan do attract 18% GST.
Do I have to pay GST when I sell my old gold?
No, an individual selling old gold jewellery to a jeweller does not charge GST, since a private sale is not a taxable business supply. GST applies only when a registered dealer later resells that gold, at 3% on the resale value.
When should I factor the GST rate on gold into my financial planning?
Worth checking before any large gold purchase or when comparing gold against other investments such as digital gold or gold-linked mutual funds, since the 3% GST plus making charges adds a real, upfront cost that reduces your effective return. A financial adviser can help you weigh this against other ways to hold gold in your portfolio.