Gold is a commodity that everyone loves throughout human history and this is not going to change at all.
Gold is also known as god’s currency because of its universality and acceptance throughout the world.
At all levels, whenever you purchase gold, your purchase is subject to GST which is a tax levied by the Government on the purchase of Goods and Services.
There are a lot of charges which are associated with gold right from import to the user end, as a result, GST on Gold rates can vary depending on what stage of production it is currently in.
In this article, we will discuss how GST is calculated on Gold Jewellery and what are other charges levied on it.
Different rates applicable on Gold
The following are the different rates applicable to the Gold-
- 12.5% on Custom Duty
- 3% GST on the Gold price used for manufacturing the Jewellery
- 5% GST on making Charges
- Cess is also charged on the gold in form of 2.5% AIDC on gold imports
Since Gold is imported into India so an import duty will be charged to the gold procurer
Import Duty
Import Duty is the duty which is charged by the government when goods are procured from outside of India. This ensures that Government gets some money to inform of taxes for every imported item.
When it comes to gold, India charges a 12.5% import duty which was increased from 10% to manage the demand and supply equilibrium.
Indians have a huge demand for gold, whether it’s a wedding or any other ceremony, Gold always has a cultural and religious signification which makes gold precious.
GST
GST is charged on the gold purchase and is levied on the end user by the Jewellers or merchants. A 3% GST is charged on the gold purchase. So, if you purchase gold worth Rs.50,000/- then a 12.5% import duty along with GST of 5% GST will be charged so the total amount to be paid b the customer will be 57,937.5 (Import Duty + GST)
Making Charges
A 5% making charge is imposed on the customer by the Jewellers or Merchants. A separate GST is also charged on the making charges. Making charges are not taxes per se but these charges are significant and can vary from 8% to 35% of the price.
BY expanding the above example, with Rs.57,937 making charges of 8% with GST on the making charges. The cost of Gold now comes at Rs.4866.70 in addition to the base cost. So, the total cost of gold now comes to Rs.62,803.70/-.
Agriculture Infrastructure Development Cess (AIDC)
Indian Government also imposes a cess of 2.5% which directly goes to the development of the Agricultural infrastructure of the country. So now, the total cost of the gold is Rs.64,212.45/-.
Tax Deduction at Source (TDS)
When someone buys physical gold worth more than Rs.1 Lakhs then a TDS of 1% is also charged.
Exchange of the Gold for New Gold
We often exchange our old gold ornaments for a new ones. In these types of purchases, GST is not applicable up to the amount where the exchange is done.
For example- if you’ve exchanged gold worth Rs.50,000/- and purchase gold worth Rs.50,000/- then no GST will be levied on this purchase. You only need to pay other charges as applicable.
GST will be only applicable to the differential amount on an exchange that comes out after making the exchange.
