Goods and Services Tax (GST) on Gold

The Goods and Services Tax (GST), which will be brought in on July 1st, 2017 will usher in a new era in taxation in India and investors, manufacturers as well as consumers have been waiting with bated breath for news regarding the new tax slabs. With GST set to replace taxes such as VAT (value Added Tax), Central Excise Duty and Customs Duty among other taxes, the government has proposed 3 tax slabs under the new tax regime.

The GST for gold was fixed at 3%, with an additional 8% tax levied on making charges. The tax on the making charge was then reduced to 5% due to concerns raised by various groups.

Gold Rate After GST

The price of gold following the adoption of the Goods and Services Tax (GST) regime has seen some fluctuations. Analysts were apprehensive that the tax would lead to a decline in demand for gold due to the high incidence of taxation.

At present, gold prices are seeing a rise due to unstable markets in spite of the additional tax burden. While the overall price of gold has risen, this has been due to the import duty associated with the metal, which has been retained. As a result, gold continues to attract an import duty of 10%, in addition to the 3% GST and 5% making charges GST.

The price of gold after GST has been steadily increasing due to higher demand for the yellow metal in overseas markets. The plunging U.S. dollar has led to higher volumes of trade in the metal, thereby increasing its value.

Long-term outlooks regarding the gold rate in India after GST appear to be mostly positive. Fears of increased smuggling due to the high costs associated with buying the metal abound, but it remains to be seen if these will come to pass. For the moment, the jewellery sector appears to be content with the price of gold after GST, though consumers have a few complaints over the rising cost.

GST on Gold Purchase

The tax slabs were announced on June 3rd, 2017 and gold will be taxed at a rate of 3%. In other words, all gold and gold-related jewellery would be taxed at a flat rate of 3%, which would be borne by the end consumer.

GST on Gold Making

In addition to this, the government has also levied a 5% tax on making charges. At present, there is no tax on making charges, which account for close to 12% of the actual cost of the gold.

The tax on making charges was initially fixed at 18%, but appeals from Indian jewellery councils and bodies to reduce the rate resulted in the government fixing it at the present 5%.

A higher tax on making charges would have increased the burden on consumers, since the added cost would have been passed on to them. The initial rate of 18% would have also resulted in consumers having to pay close to 4% as tax.

Jewellery bodies and councils have lauded the change in rate and are confident that it will result in greater transparency in the gold manufacturing market.

FAQs on Goods and Services Tax (GST) on Gold

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

    A GST of 3% is charged on gold in India. Moreover, jewellers charge 5% of the price as GST making charge.

  2. Can GST on gold be claimed?

    In case you are a registered jeweller, then you can claim an input tax credit of 2% on making charges of jewellery.

  3. Is there any way to save GST on gold?

    In case you are selling old gold jewellry and purchasing new gold jewellry in a single transaction, no GST will be charged. This means that individuals can save on GST tax by simply exchanging old gold items with new gold.

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

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

  5. How much tax is charged on digital gold?

    A 20% tax is charged on digital gold.

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

    A GST of 3% is charged on silver articles and jewellery.

  7. How much GST will be charged on gold coins?

    A GST of 3% will be charged on gold coins.

  8. Is eWay bill required for transportation of gold?

    No, eWay bill is not required for transportation of gold according to the CGST Rule 138(14).

Also check Today's Gold Rate in the most popular Indian cities

Read More on Gold

News Related to Goods and Services Tax (GST) on Gold

  • Spot gold prices on 12 October 2021

    The price of spot gold on 12 October in India saw an increase of Rs.84.9, settling at Rs.46,950, when the previous day's prices were Rs.46940. This was in sync with the prices of spot gold globally as well which saw an increase of $3.25 to settle at $1816.7. There was also an increase in the prices of gold on the Multi Commodity Exchange (MCX) by Rs.84.9 to settle at Rs.47151.

    13 October 2021

  • Gold prices take a hit due to weak trends in the international market

    The price of gold dipped by Rs.276 to Rs.47,047 per 10 grams in the bullion market in Mumbai. The price of the metal dipped due to investors booking profits after the metal hit near highs in the previous sessions.

    On 15 June, gold prices were trading lower after Beijing reported a rise in fresh COVID-19 cases which could result in lower demand for the precious metal. The price of 22-karat gold in Mumbai was Rs.43,095 per 10 grams excluding GST of 3% and 24-karat gold was value at Rs.47,047 per 10 grams plus 3%.

    SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund stated that its holding increased by 0.1% to 1,136.22 tonnes on 20 June.

    Silver prices dipped by Rs.840 per kg and were Rs.46,915 per kg on 12 June and in the futures market, gold prices hit an intraday high at Rs.47,246 per 10 grams on the Multi Commodity Exchange. For the August delivery, the metal touched a low of Rs.39,200 per 10 grams and a high of Rs.48,190 per 10 grams.

    Gold futures for August delivery dipped by Rs.599 at Rs.46,765 per 10 grams for a business turnover of 13,964 lots, with a percentage decline of 1.20%. For October delivery, the metal eased by Rs.575 to Rs.46,928 per 10 grams for a turnover of 5,554 lots.

    22 June 2020

  • High GST Will Affect The Gold Demand In India, Says World Gold Council

    According to the World Gold Council (WGC), gold demand in India is expected to remain low in 2018 due to the new transparency regulations and higher taxes levied on purchases.

    With India being the second-biggest global consumer of gold, a low demand could affect the global rates that rose by 8% since mid-December.

    Somasundaram, the MD of World Gold Council’s Indian operations stated that the consumption of gold for this year will probably range from 700 to 800 tonnes.

    The demand in India averaged at 840 tonnes for the past ten years. However, with the government imposing higher GST (Goods and Service Tax), the demand is certain to see a lag on gold purchases. The GST on gold in July 2017 was 1.2%, which has been now raised to 3%.

    6 February 2018

  • Gold Imports Triple In India After GST, Demonetisation

    India has seen a tripling of its gold imports in August 2017. The country imported 60 tonnes of the yellow metal in August 2017 as compared to 22.6 tonnes for the same period in the previous year. The highest volume of imports was from South Korea as there is no import tax following the introduction of GST on July 1st, 2017.

    Due to a loophole that allowed the import of gold from South Korea without payment of import duty, there was a flurry of demand from traders and consumer alike.

    However the government has restricted the import of gold from the south Asian country in an effort to rein in the amount of duty-free gold flooding the market.

    7 September 2017

  • Economic survey says GST on gold is too low

    As per the Economic Survey Volume -II tabled in the parliament for the year 2016-17, the current GST rate of 3% on gold is apparently too low.

    Arvind Subramanian, the Chief Economic Advisor (CEA) and also the author of the survey, wrote that the 3% GST rate of gold and other jewellery products is too low because it is mostly consumed by the rich.

    In the report, Mr.Subramanian also spoke about education and healthcare, which don’t come with any GST imposed on them. Commenting on this, the CEA said that leaving out these two sectors is inconsistent with equity as they are consumed disproportionately by the rich as well. Leaving them out of the tax purview altogether is a very bad fiscal move, the report stated.

    17 August 2017

  • GST Brings Fresh Set Of Woes For Jewellery Sector

    With the advent of Goods and Services Tax (GST), the jewellery industry appears to be going through a slump. The sector had just recovered from the effects of demonetisation when the government announced the GST on gold.

    Surprisingly, it is not the tax rate (3% on gold and 5% on making charges) that is the main grouse, but the procedures. Traders are required to generate an e-way bill to move goods over Rs.50,000 under the new tax regime. As a result, gold traders are finding it difficult since gold is a high-value commodity that is moved multiple times.

    Many traders say generating a new e-way bill is impractical for such a small sum of money. In addition, the jewellery sector was not covered under online monitoring systems. As a result, most jewellers are unsure of what norms to follow for the time-being.

    29 July 2017

  • Jewellers Have Mixed Reaction To GST Exemption On Old Jewellery Sale

    The government’s announcement of the waiver of GST on the sale of old gold jewellery has been met with a mixed response from jewellers.

    Many fear that this will widen the gap between big and small players as well as encourage smuggling of the precious metal.

    Jewellers who buy old gold to recycle are exempt from GST but jewellers with a turnover of less than Rs.75 lakh would have to pay 1% when they sell the recycled jewellery.

    As the import duty of gold is currently 10%, most jewellers would prefer recycling old jewellery and paying nothing in the way of tax. However, this gold could also be exported since customs duty is much higher than the GST rate of 3% and jewellers would be looking to make a fast buck on the side.

    16 July 2017

  • GST Not To Be Levied On Sale Of Old Gold Jewellery

    Gold sold by individuals will not attract GST, which will provide relief to consumers who exchange jewellery.

    According to the clarification by the Finance Ministry, selling old jewellery to a jeweller will not attract GST since the gold does not qualify as supply. An unregistered supplier selling to a registered supplier, however, will be required to pay the applicable GST on the items sold.

    Under the Goods and Services Act, gold attracts a tax of 3%, with an additional 5% being levied as making charges for custom orders.

    14 July 2017

  • Gold imports rise in June, thanks to new tax laws - GST

    There has been an unprecedented rise in the number of gold imports this June as compared to the previous year due to the sudden growth in demand from the retail sector just before the launch of the new taxation system in the country.

    The number of imports made this year's stood at 75 tonnes when compared to 22.7 tonnes the previous year, a major climb up. Many say that the number of imports made in July is likely to drastically come down and this may also result in a drop in gold prices.

    Analysts say that the consumers were in a hurry to make purchases before July and therefore the demand was unusually high in the month of June.

    Generally, the demand for gold is not very high during July because there are no functions or weddings held during this time.

    12 July 2017

  • Bank’s own gold import affected due to GST

    The banks importing bullion on account of GST are impacted since they might have to pay more tax than earlier. Under the new GST norms, banks are required to pay 3% additional indirect tax that has increased from the previous figure from 10% to 13%. The increase has become a deterrent for many banks and it might impact the demand for gold significantly. Banks are now hesitant to import gold on their own account.

    4 July 2017

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