GST on Gold – Impact of Gold GST Rate, Calculation & Exemption

GST on gold in India is charged at 3% on the value of the gold metal and 5% on making charges for jewellery. The rate has not changed under the GST 2.0 reform that took effect on 22nd September 2025. Sovereign Gold Bonds carry no GST, though the government has not issued a fresh tranche since February 2024. Digital gold attracts 3% GST, and the rate applies uniformly across all states and all gold purity levels.

The implementation of the Goods and Services Tax (GST) on July 1st, 2017, marked the beginning of a new era in taxation in India. Investors, consumers, and manufacturers alike have eagerly awaited news related to the new tax slabs. The GST has replaced several indirect taxes, including VAT (Value Added Tax), the service tax, and the central excise duty. Under the new tax regime, the government proposed three tax slabs: CGST, SGST, and IGST.

Update for 2026: The 56th GST Council meeting, held on 3rd September 2025 in New Delhi under Finance Minister Smt Nirmala Sitharaman, approved what is now called GST 2.0, replacing the old four-slab structure (5%, 12%, 18%, 28%) with two main slabs of 5% and 18%, plus a new 40% slab for luxury and sin goods. These changes took effect from 22nd September 2025.

Gold, silver, and a handful of other precious-metal categories were deliberately excluded from this rate rationalisation and continue to be subject to their own special rate, which is discussed next.

This article discusses the GST on gold in various forms, including the tax on the making charges on gold jewellery that was introduced under GST. Despite this, basic customs duty is still collected on the import of gold from other countries, along with the levy of IGST. According to the GST law, gold bars or gold jewellery fall under the definition of 'goods'. Under Section 7 of the CGST Act, the supply of gold (without any job work) is considered the supply of goods.

Update for 2026: Customs duty on imported gold has changed twice since the GST years covered above. The Union Budget 2024 sharply reduced the basic customs duty on gold, from 15% to 6% (5% basic customs duty plus 1% agriculture infrastructure and development cess), effective from 24 July 2024. Both Budget 2025 and Budget 2026 kept this 6% rate unchanged. So, how much GST on gold imports actually costs today is 3% IGST plus 6% customs duty.

Here is the complete picture of the GST rate on gold as it stands today, after the September 2025 reform:

Whether you are checking the GST rate on gold jewellery, plain gold coins, or GST on gold ornaments bought for a wedding, the underlying rate is the same 3% on the metal; only the making-charge line changes depending on whether the piece is hand-crafted jewellery or a plain bar or coin.

GST for gold is as follows –

However, the implementation of the Goods and Services Tax (GST) in 2017 had a significant impact not only on the gold trade but also on the retail price of gold. Moreover, varying gold GST rates on different types of gold trade also make the tax filing process complicated for gold traders and manufacturers.

Update for 2026: This HSN-wise structure has not changed under GST 2.0. and continues at 1.5% CGST + 1.5% SGST (or 3% IGST), i.e., 3% total (gstcouncil.gov.in).

In practice, however, most jewellers, including large branded retailers, still itemise the bill as 3% GST on the gold value plus 5% GST on making charges shown as a separate line, which is the format buyers see on most invoices today. If your bill shows a single combined GST line at 3% on the full amount, that is also a legally valid way of billing the same transaction under the composite-supply rule; either format should arrive at a similar tax outcome on the gold portion.

Separately, a registered job-worker (a karigar or workshop) who manufactures jewellery on behalf of a jeweller, rather than selling directly to consumers, charges GST under SAC 9988. This started at 5% in 2017 but was reduced to 1.5%. The 1.5% rate is for the B2B job-work service, not the retail bill a customer pays.

The price of gold has been fluctuating since the Goods and Services Tax (GST) regime was implemented. The import duty on gold remains at 10%, with an additional 3% or 5% GST on making charges, depending on whether the goldsmiths are registered under GST. GST is not charged on the exchange of gold ornaments or second-hand gold jewellery, but repair works on jewellery will be charged separately at 5% GST.

To calculate the price of gold, the price of gold per gram is multiplied by the weight in grams, and then the making charges and 3% GST are added. For example, if the price of gold is Rs. 40,000 per 10 grams and making charges are 10%, the price of jewellery would be calculated as follows: Price of gold (Rs. 40,000 per 10 grams) x weight in grams + making charges + 3% GST

The example above shows that the price of gold has increased under the new GST tax structure, compared to the previous tax system. This increase is despite a lower demand for gold in the market. The prices have gone up by approximately 0.75% due to the additional taxes levied on gold, which includes 3% GST on top of the 10% import duty.

Updated example at June 2026 gold rates: The table above uses a Rs. 40,000-per-10-gram price point from when GST first launched, which is now far below the market. Here is the same calculation with current numbers, so the formula is easier to apply to a real purchase.

GST Calculation Formula for Gold

Gold Value = Weight (grams) × Market rate per gram

GST on Gold Value = Gold Value × 3%

GST on Making Charges = Making Charges × 5%

Total Payable = Gold Value + Making Charges + GST on Gold + GST on Making Charges

Worked example: buying a gold necklace: As of late June 2026, retail 22-carat gold was trading at roughly ₹13,100 per gram across major Indian cities. Assume a 10-gram 22-carat necklace with making charges of 12% of the gold value.

GST on gold in India is not identical across every way you can hold or buy the metal, and the rules for GST on gold jewellery in India specifically differ from coins, digital gold and government bonds. Here is how each format is actually taxed today:

GST on new gold purchased as 22-carat or 24-carat jewellery attracts the same 3% rate either way; carat purity does not change the GST slab; only the value of the metal itself changes the rupee amount of tax payable.

Digital gold and gold ETFs: Digital gold bought through apps or fintech platforms is taxed the same way as physical gold: 3% GST on the transaction value at the time of purchase. Gold ETFs and Gold Fund-of-Funds, on the other hand, are units of a mutual fund scheme, not direct ownership of metal, so there is no GST charged to the investor on purchase; GST is only paid by the fund on its own expense ratio components, which are already built into the fund's costs.

Sovereign Gold Bonds: An Important Update: SGBs have always been GST-free since they are a government security issued by the RBI, not a supply of goods.

GST on a gold purchase through an exchange or trading in old jewellery for a new piece; it works differently from a fresh purchase. The old gold an individual hands over is treated as the sale of a personal asset, not a taxable supply, so it does not attract GST. Only the value of the new gold added by the jeweller, plus the making charges on the new piece, is taxed.

At the 31st GST council meeting held on December 22, 2018, it was announced that a GST exemption would be granted for the supply of gold made by a notified agency to GST-registered gold jewellery exporters. This move has helped to reduce the GST burden on Indian gold jewellery exporters, making Indian gold exports more competitive on the global market. However, the exemption does not apply to domestic buyers of gold jewellery.

Beyond the export exemption above, a few other situations sit outside GST entirely, and it helps to be clear on the difference between "exempt" and "no GST event":

• Sovereign Gold Bonds; no GST on purchase, interest, or redemption, since they are a security, not goods.
• Gold received as a gift; there is no GST event for the recipient; GST applies to a supply of goods for consideration, and a gift between individuals is not that.
• Inherited gold: transfer on inheritance is not a taxable supply, so no GST applies.
• RBI-issued gold coins: a common misconception is that these are exempt. They are not; gold coins sold by banks or RBI-authorised agencies attract the standard 3% GST like any other gold coin.
• Job work for registered exporters: gold supplied by a notified agency for export-oriented jewellery manufacturing remains GST-free, but only for that specific export chain.

A jeweller or gold merchant is eligible to claim an Input Tax Credit (ITC) on the raw materials used, such as gold, and on the job work charges incurred. In cases where the gold merchant pays tax on a reverse charge basis for supply from an unregistered job worker, they can still claim the ITC on the tax paid.

A few practical points for jewellers running their business in 2026:

• ITC is available on gold purchased as raw material for manufacturing, on job-work charges paid to registered karigars, and on capital goods like manufacturing machinery, but not on gold bought for personal use or given away as a gift.
• ITC depends on the supplier having actually filed their GST return; if it does not appear in your auto-populated GSTR-2B statement, you cannot claim it, even if you hold a valid invoice.
• E-invoicing is mandatory for any registered business with an aggregate turnover above ₹5 crore in any year. Every B2B invoice above that threshold needs an Invoice Reference Number (IRN) from the government's Invoice Registration Portal to be valid for ITC.
• HSN codes must be quoted correctly on every invoice: 7108 for gold bars, 7113 for jewellery, and 7118 for coins, since an incorrect HSN can hold up a buyer's ITC claim during reconciliation.
• Registration itself is mandatory once annual turnover crosses ₹40 lakh for the supply of goods (₹20 lakh in certain special-category states), under Section 22 of the CGST Act, regardless of how the gold business is structured.

Impact on Gold Import

After the implementation of GST in our country, the import of gold has increased. Importers have increased the import facility not only for the advantage of the current tax revisions but also as a benefit under the Free Trade Agreement with South Korea. The importers import the gold without the payment of 10% custom duty under this agreement.

Impact on the Unorganised Gold Sector

Due to the huge demand for this metal in our country, India has the highest imports of this globally. Out of all the demand for this metal, on average, some portion of the demand is met through illegal means, i.e., by being smuggled into the country through alternate routes. This becomes the unorganised sector of gold. Due to the increase in the prices of gold after the introduction of GST, the smuggling of gold in our country has increased compared to the ratio before the implementation of GST.

Impact on the Organised Gold Sector

It is important to note that while the implementation of GST has led to an increase in compliance requirements for gold traders in the organised sector, it has also brought in more transparency and accountability. The fear that it may drive traders towards the unorganised sector is a concern, but it is important to ensure that all gold transactions are reported and accounted for to prevent tax evasion. While there may be short-term challenges for the organised sector, the long-term benefits of increased transparency and competitiveness are likely to outweigh them.

Why Gold Was Left Out of GST 2.0

The September 2025 GST 2.0 reform restructured most of the economy into 5% and 18% slabs but deliberately excluded gold and silver from the rationalisation. The Council's stated reasoning, reflected in its press materials, was to protect a culturally significant, high-demand commodity from price shocks and to avoid pushing buyers towards smuggled gold. Combined with customs duty holding steady at 6%, the net effect is that gold's total tax load has stayed essentially flat since July 2024, even as most of the rest of the GST system changed around it.

GST on gold is a one-time cost charged at the point of purchase; it is not charged again when you sell physical gold later. For someone buying gold purely as jewellery to wear, this 3% (plus 5% on making charges) is simply part of the retail price. For someone buying gold as an investment, though, it is worth treating that 3% as a sunk cost that eats into returns from day one and factoring it into how different gold-investment routes compare.

A few practical differences worth weighing:

• Physical gold (coins, bars, and jewellery) carries the 3% GST cost upfront, plus making charges and GST on those charges specifically for jewellery. Coins and bars skip the making-charge layer, so they are the cheaper physical route for pure investment.
• Sovereign Gold Bonds, where available on the secondary market, were structured to carry no GST and no making charges, while also paying 2.5% annual interest – a combination physical gold cannot match. The trade-off is that fresh SGB issuance has been paused since February 2024, so today's entry route is the stock exchange, at the prevailing market price for that series rather than a fixed issue price.
• Gold ETFs and Gold Fund-of-Funds also carry no GST at the investor level and offer easier liquidity than physical gold or even SGBs, though they come with a fund expense ratio that physical gold and SGBs do not.
• Digital gold attracts the same 3% GST as physical gold, with the added cost of storage or platform charges over time, so it generally does not avoid the GST layer that jewellery and coins incur.

None of these factors makes one route objectively "better"; it depends on whether liquidity, physical possession, or minimising entry costs matter most for a given goal. What it does mean is that the 3% GST figure quoted throughout this article is not just a tax detail; it is a real, fixed drag on returns for anyone investing in physical or digital gold and a number worth comparing across instruments before deciding where to put money.