GST on Gold in India: What You Need to Know

Gold has been an integral part of Indian culture and investment strategy for centuries. However,  since the implementation of the Goods and Services Tax (GST) in July 2017, the taxation landscape for gold purchases has undergone significant changes. 

‍

Understanding these changes is crucial for both investors and consumers who buy gold regularly.

‍

What is GST & How Does It Apply to Gold? 

‍

Goods and Services Tax (GST) is a comprehensive indirect tax that replaced multiple taxes like VAT,  excise duty, and service tax. It's a destination-based tax levied on the supply of goods and services throughout India.

‍

For gold, GST applies at different stages:

‍

• Manufacturing level- When gold is processed into jewellery or coins. 

• Retail level– When consumers purchase gold products. 

• Import level- When gold is imported into India.

‍

The key principle is that GST is charged on the value added at each stage of the supply chain,  making it a more transparent taxation system. 

‍

GST Rate Structure for Gold Products 

‍

Primary GST Rates

‍

The design of the GST structure for gold includes specific rates for various components.

‍

‍

Impact on Different Types of Gold Purchases 

‍

Physical Gold Products

‍

‍

Digital Gold Purchases

‍

‍

Download the Jar app to start your digital gold saving journey.

‍

GST Impact on Gold Imports 

‍

India imports approximately 70–80% of its gold requirements, making import taxation crucial for overall pricing. 

‍

Import Structure

‍

• Basic Customs Duty: 12.5% on gold imports  

• Agriculture Infrastructure and Development Cess: 2.5%  

• GST on Imports: 3% on landed value (including customs duty) 

‍

Unlike most goods, gold offers almost no GST exemptions—only agricultural tools, export manufacturing, and government purchases qualify, with no relief for religious, investment, or personal purchases.

‍

Comparison: Pre-GST vs Post-GST Era 

‍

Comprehensive Tax Calculation

‍

‍

Tax Evolution Analysis 

‍

Pre-GST Multiple Tax System

‍

‍

Post-GST Unified System

‍

‍

GST implementation on gold resulted in a net benefit to consumers, reducing the total tax burden by ₹1,200 (25.5% tax reduction) on a ₹1,00,000 jewellery purchase while simplifying the complex. The transition from a multi-tax structure to a transparent, uniform system has occurred across India.

‍

GST on Gold: Additional Insights You Should Know

1. Uniform GST Across All Gold Purities (18K, 22K, 24K)

Whether you’re buying 18K gold jewellery for daily wear, a 22K wedding ornament, or investing in 24K digital gold, the GST rate on gold remains the same — 3% on the gold value. This uniform GST on different gold purities ensures transparent pricing across various product categories and simplifies taxation for both buyers and jewellers.

2. Understanding HSN Code for Gold and Jewellery

The HSN code for gold jewellery under GST is 7113, which is used for classification during billing and tax filing. If you're getting jewellery custom-made or repaired, job work services are classified under HSN code 9988 and attract 5% GST on making charges. Knowing these HSN codes for gold helps businesses stay compliant and consumers understand their bills better.

3. GST on Digital Gold Investments

With the growing popularity of platforms like Jar, digital gold has become a preferred choice for young investors. Just like physical gold, digital gold attracts 3% GST on the transaction amount. The tax is collected at the time of purchase, keeping digital gold taxation on par with traditional formats.

4. GST on Imported Gold: What You Pay

Imported gold attracts multiple layers of tax. First, there's a 12.5% customs duty, and then 3% IGST (Integrated GST) on the total value (including customs duty). This combination significantly impacts pricing and is a key consideration for businesses importing gold for resale or manufacturing.

5. How GST Applies to Gold Investments: ETFs vs SGBs

When investing in gold, you have the option to choose between Gold Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs). Both options offer unique advantages, but they also have different GST implications.

For Gold ETFs, there is no GST on the purchase of ETF units itself, which makes them a tax-efficient option for gold investment. However, it’s important to note that the fund management fees associated with Gold ETFs attract 18% GST. These fees are typically charged by the asset management companies (AMCs) that manage the ETF, and they are subject to the standard GST rate for financial services.

On the other hand, Sovereign Gold Bonds (SGBs) are exempt from GST on the purchase value of the bonds. This makes them an attractive choice for long-term gold investors, as the bonds themselves don’t incur any direct tax. However, if you pay any brokerage fees while purchasing the bonds through a third-party service, those fees will attract 18% GST.

This distinction means that while SGBs are free from GST on their value, Gold ETFs may carry a slight tax burden through the fund management fees, making the GST on ETFs higher in comparison to SGBs, which are largely GST-exempt.

‍

Download the GST Invoice template in excel, word and PDF format to file your taxes.

Conclusion

‍

GST on gold has brought transparency and uniformity to gold taxation in India, though it has slightly increased the overall tax burden compared to the pre-GST era. 

‍

The 3% GST on gold value and 5% on making charges are now standard across the country, eliminating the confusion of multiple state-level taxes.

‍

For investors, the key is to choose the right gold investment vehicle based on their objectives. 

‍

Physical gold coins and bars remain the most cost-effective option for those wanting physical possession, while digital gold and ETFs offer tax advantages for pure investment purposes.

‍

Bottom line: While GST has added to the cost of gold purchases, the transparency and uniformity it brings make it easier for consumers to make informed decisions. 

Smart buyers should focus on minimising making charges, comparing dealers, and choosing the most appropriate form of gold investment for their specific needs.

‍