GST on Jewellery
GST on jewellery is the Indian goods and services tax on a sale, at 3 percent on gold and stone value plus 5 percent on making charges.
GST on jewellery in India is applied at the point of sale in two parts. The value of the gold and any stones is taxed at 3 percent, while the making charge is taxed at 5 percent. Both rates apply regardless of the gold's purity, and a compliant system has to split the invoice correctly so the tax lands on the right lines.
The two rates and where each lands
The split is the thing to get right. Gold value and stone value attract 3 percent GST. The making or labour charge attracts 5 percent. These are not blended into one rate. A single invoice therefore carries two different GST calculations, one for the material and one for the craftsmanship.
Purity does not change the rates. Whether a piece is 22K, 18K or 14K, the metal is taxed at 3 percent. What changes the tax is only which line a rupee belongs to, material or making, so the classification of each component is what drives the correct total.
Working a full example
Take a 22K ring with 50,000 rupees of gold value, a 5,000 rupees diamond and a 7,000 rupees making charge. The 3 percent line applies to the gold and the stone together, 55,000 rupees, giving 1,650 rupees of GST. The 5 percent line applies to the 7,000 rupees making charge, giving 350 rupees. Total GST is 2,000 rupees, and the invoice total is 64,000 rupees.
Getting the split wrong is expensive in both directions. Charge 3 percent on the making and the invoice is short and non compliant. Charge 5 percent on the metal and the customer is overtaxed. This is why the calculation belongs in the pricing engine rather than in a person's head.
Why the system, not the salesperson, should apply it
Every displayed price and every invoice has to reflect these rates, and doing it by hand on hundreds of sales invites error. When the pricing engine knows which portion is metal, which is stone and which is making, it applies 3 percent and 5 percent to the right lines automatically, so the MRP shown and the bill produced are both compliant. A hallmarking charge, where present, is a separate small line handled alongside these.
- Gold and stone value are taxed at 3 percent GST.
- Making charges are taxed at 5 percent GST.
- The rates apply regardless of the gold's purity.
- The two rates must be split across the correct invoice lines.
GST on Jewellery, in short.
Is GST on gold jewellery 3 percent or 5 percent?
Both, on different parts. The gold and stone value is taxed at 3 percent and the making charge at 5 percent, so a single invoice carries the two rates on their respective lines.
Does the purity of the gold change the GST rate?
No. The 3 percent rate on metal value applies whether the piece is 22K, 18K or 14K. Purity changes the metal value, not the tax rate applied to it.
Is GST charged on the making charge separately?
Yes. The making charge is taxed at 5 percent, distinct from the 3 percent on the gold and stones, which is why the two components are shown and taxed as separate lines.
Are hallmarking charges taxed the same way?
A hallmarking charge is a small separate fee. It is billed as its own line alongside the metal, stone and making charges rather than being folded into the metal value.
Related terms
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