GST stands for Goods and Services Tax and is levied on any supply of good and services and sometimes on both. It does not apply for the alcohol supplied for human consumption. When it comes to GST on gold Jewellery, the Indian government levies GST on both services and manufacturing of Gold. GST has to be paid on gold that you buy and also for the making charges that you are paying, when you buy any gold jewellery.
Different Gold GST rates
- When the gold is used in the making of the jewellery, the GST on jewellery is 3 % only.
- You will have to pay a GST of 5 % on the making charges that you are paying.
- If it is an imported gold, then you will have to pay a GST of 10 % custom duty.
What was the Scenario before GST was implemented?
Before the concept of GST was implemented, along with the custom duty, you need to pay 1.2 percent Value added tax (VAT) and 1 percent Excise Duty. The best part was that there was no extra tax for the making charges you pay. But if you are selling off your old gold jewellery or want to exchange it for a new jewellery, then you will have to pay a tax of 3 percent. There were both advantages and disadvantages of before and after the implementation of GST.
How to calculate GST on gold?
Here is how you can calculate GST rate on gold:
For example, consider the price of one gram is Rs. 4000 and the GST on making charges is 10 %.
|GOLD Details||Pre-GST||After GST|
|Gold rates||25 grams||Rs.100000||Rs.100000|
|Custom Duty||10 percent||Rs.10000||Rs.10000|
|Service Tax||1 percent||Rs. 1,100||NA|
|GST||3 percent||NA||Rs. 3300|
|VAT||1.2 percent||Rs. 1333.20||NA|
|Total price for 25 grams||Rs. 112433.20||Rs. 113300|
How to calculate GST on Gold jewellery?
Here is how you can calculate the GST rate on gold jewellery:
For example, consider the price of one gram is Rs. 4000 and the GST on making charges is 10 %, and check out the gold rate with GST.
|Tax Rate||Pre-GST||After GST|
|25 grams gold price||Rs. 100000||Rs. 100000|
|Customs duty||10 %||Rs. 10000||Rs. 10000|
|Service tax||1 %||Rs 1100||NA|
|GST||3 %||NA||Rs 3300|
|VAT||1.2 %||Rs. 1333.20||NA|
|Making charges||10 %||Rs. 11000||Rs. 11000|
|GST for making charges||5 %||NA||Rs. 550|
|Total amount for 25 grams||Rs. 123433.20||Rs. 124850|
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So, this is how the GST on jewellery and raw Gold is calculated. The GST on gold ornaments is different from that on raw Gold, and hence you need to keep this point in mind. But when you are buying gold jewellery, you will have to understand that the GST on the stone is different from the Gold. Make sure that GST charges are mentioned differently for both of these. The process of GST calculation is quite simple if you can understand the different types of taxes that you will have to pay when you are buying raw Gold or gold jewellery, that means from raw Gold to the manufacturing process.
There are a few exemptions provided at the 31st meet of the GST council. The exemption is provided to the licensed jewellery exports from the notified individuals. The reason why this exemption was provided is to make sure that India’s Gold sector remains in the global gold market. When the burden of GST is reduced on the gold jewellery exporters, then they will remain active in the market.