The purpose of the GST system was to deal with the various taxes imposed on goods and services at multiple points of sale or transfer.
Gold is one of the rare products that have different GST rates depending on its value. We all know gold is an excellent and reliable source of investment.
The implementation of the Goods and Services Tax has an impact on the manufacture of gold as well as on the buying and selling of gold.
In this article, we will explore the impacts of the GST on gold prices. By the end of this article, you will be able to understand all the details about the GST on gold.
Let’s dive into the topic.
What is the GST on 2022 gold?
The government proposed three tax slabs for the new tax system, with GST to replace taxes such as VAT (Value Added Tax), Central Excise Duty, and Customs Duty, among others.
Now there are different GST rates for the purchase of gold, import duty, and making charges on gold.
Here is the table that shows the different GST rates for gold:
| Particulars | Before GST | After GST |
| Gold Sale Tax | 1% | Nil |
| Gold Value VAT | 1% | Nil |
| Gold Rate (Value of Gold) | Nil | 3% |
| Gold Making Charges | Nil | 5% |
According to Section 7 of the CGST Act, the GST on gold (with HSN code) is as follows:
| Particulars | HSN Code | GST Rate |
| (1) Precious stones (other than diamonds) and semi-precious stones, whether worked or graded but not strung, mounted or set (2) Ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport (includes synthetic or reconstructed stones, apart from unworked or simply sawn or roughly shaped) | 7103, 7104 | 0.25% |
| Diamond, gold, pearls, silver, or articles of jewellery of silver or gold, and so on, including synthetic or reconstructed stones, unworked or simply sawn or roughly shaped | 7101, 7102, 7106, 7107, 7108, 7109, 7111, 7113, 7114, 7116, 7118 | 3% |
| Job work in relation to cut and polished diamonds, plain or studded jewellery of gold, silver and so on | 9988 | 1.50% |
How is gold tax calculated?
Due to the lack of a standard billing system, jewelers use a variety of different billing procedures. In each city, the jewelry association announces a daily gold rate statement.
Anyhow, the final price of gold is calculated using the following formula:
Price of Gold ✕ weight (in grams) + making charges + GST @ 3% (on jewelry price + making charges)
Example
Suppose the price of gold is Rs. 40,000 for 10 grams; now we will calculate the difference between the pricing of gold in the pre-GST era and the post-GST era.
| Particulars | Price under previous tax structure | Price under GST tax structure |
| Cost of 25gram of gold (A) | ₹ 1,00,000 | ₹ 1,00,000 |
| Customs duty at the rate of 10% (B) | ₹ 10,000 | ₹ 10,000 |
| Service tax levied on the sum of the price of gold and making charges (C) | ₹ 1100 | – |
| GST levied at the rate of 3% on the sum of gold and making charges (D) | – | ₹ 3300 |
| VAT charged on the sum of (A+B+C) at the rate of 1.2% | ₹ 1333.2 | – |
| Final price of 25gm of raw gold | ₹ 112433.2 | ₹ 113300 |
How much gold is tax-free in India?
According to the Central Board of Direct Taxes (CBDT), the exemption depends on gender:
| Particulars | Limit Per Person |
| Married Woman | 500gm |
| Unmarried Woman | 250gm |
| Married/Unmarried man | 100gm |
Why is GST 3% on gold?
As the sale of gold is the primary supply, the GST rate of 3% instead of 5% is applied to the overall value of jewelry, whether making charges are listed separately.
How can you save GST on gold?
You can save GST on gold if you are purchasing new gold jewelry and at the same time you are selling the old gold items. This means GST will not be charged for the exchange of old gold ornaments with new gold.
Can I buy gold without GST?
No, you cannot buy gold without GST. It is illegal to buy gold without GST.
Does gold have 12% GST?
No, there is no 12% GST on gold. 3% of GST is charged on gold.
FAQs: Effect of GST on Gold Price
1. What is GST on 24-carat gold?
You have to pay 3% GST on 24-karat gold.
2. Can I deposit gold in a bank?
Yes, you can deposit gold in the bank. The minimum gold deposit is 10 grams.
3. How much GST is there on gold?
There is a 3% of GST on gold. In addition, jewelers must add 5% GST to the price of their making charge of gold.
4. Can I buy gold without a pan?
As per the government’s announcement, all cash transactions to purchase gold would require a government-issued identity card, be it a photocopy of a passport, driver’s license, PAN, or Aadhaar card.
Wrapping Up
We hope this article about the GST on gold prices resolves all your queries. Please leave a comment below or feel free to contact our expert team if you still have questions about GST. Visit our website InstaFiling to get more information on GST.
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