GST on Gold coins & making charges & HSN code

GST on Gold, Gold coins, Making charges, Gold biscuits & Gold jewelry updated 2022-23 & how to calculate GST on the price of Gold after amendments and more we will discuss in this post.

As you know, Gold is the most precious and valuable thing/commodity in the world for everyone.

Gold prices always fluctuate based on a wide range of factors and such as seasonal demand, US dollar price, Supply, Demand, etc.

India has a strong and long history of trading and investing in Gold in the types of pieces of jewelry, coins, biscuits, etc.

India has many small and large dealers who are trading in Gold because the women of India used to purchase gold jewelry for their traditional purposes.

And Indian dealers exclusively deal with gold in ornament and solid form.

Many factors related to national and international market trends decide the gold rates in India.

People usually buy it in the form of coins, jewelry, ornaments, or a Demat format.

That’s why the Gold system in India is always in Trending for trading.

List of GST on products wise 2019-20

What is the rate of GST on Gold?

Hence GST is applicable to Gold so we need to know the rate of GST on Gold which is as follows-

Custom duty12.50%If Gold is imported
GST 3%on Supply of Gold
GST 5%on Making charges on Gold

What is the rate of GST on Gold Coins?

Gold Coin falls under HSN Code 7118 and attracts a 3% GST rate

Custom duty12.50%If Gold is imported
GST 3%on Supply of Gold
GST 5%on Making charges on Gold

What is the rate of GST on Gold Jewelry 2022?

Gold Jewelry falls under HSN Code 7118 and attracts a 3% GST rate

Custom duty12.50%If Gold is imported
GST 3%on Supply of Gold
GST 5%on Making charges on Gold

What is the rate of GST on the Gold biscuit?

The rate of GST is 3% the same rate will be applied to biscuits

Custom duty12.50%If Gold is imported
GST 3%on Supply of Gold
GST 5%on Making charges on Gold

What is the rate of GST on Gold making charges?

The rate of GST on making charges on gold is 5% now

GST council had earlier decided on 18% for gold making charges, however, when GST was implemented, they decided to keep it at 5%

The Goods and Services Tax for gold was fixed at 3% and an additional 8% tax was fixed to be levied on making charges. This was condemned by many gold associations in India, and the tax on making charges was reduced to 5%.

The spike in the rate of gold can be due to the import duty which has been retained.

Currently, gold attracts an import duty of 12.50%, in addition to 3% GST, and 5% making charges (GST).

What is the rate of customs duty on Gold?

The present rate of import duty or customs duty is 12.5% which increased in 2019 from 10% (earlier). Hence, if any dealer wants to import gold from outside of the country then he has to pay a custom duty@ of 12.5% on gold.

How to calculate GST and the price of Gold?

In this process, GST can be calculated as shown below-

1Price of Gold (10gm)40220.0040220.00
2Custom duty 12.50% if imported 5027.50 Nil
3Total cost after Custom duty (1+2)45247.5040220.00
4GST on Gold 3% 1357.43 1206.60
5Total cost before making charges
6Making charges if applicable
assume 250 per gm
2500.00 2500.00
7Total cost after making charges
8GST on making charges 5% 125.00 125.00
9The final cost of Gold (7+8)49229.9344051.60
10Total GST on Gold (4+8) 1482.43 1331.60

Traditionally, a fixed amount for jewelry-making charges (in the range of Rs 100 to Rs 250 per gram depending on the type of jewelry) is levied on the customers.

What is the HSN Code for Gold & Jewelry?

Chapter 71 contains the HSN Code for all Gold, Jewelry, precious metals and precious stones, etc.

Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder fall are classified under HSN code 7108 as under:

Gold TypeHSN Code
Gold Powder7108 1100
Other unwrought forms of gold7108 1200
Other semi-manufactured forms of gold7108 1300
Monetary Gold7108 2000

HSN code for gold base metals or silver, clad with gold, not further worked than semi-manufactured is 7109

Jewelry of precious metals or of metal clad with precious metals falls under HSN code 7113 as under:

Gold TypeHSN Code
Jewelry with filigree work7113 1110
Jewelry studded with gems7113 1120
Another article on Jewelry7113 1130
Gold jewelry unstubbed7113 1910
Jewelry set with pearls7113 1920
Jewelry set with diamonds7113 1930
Jewelry set with other precious and semi-precious stones7113 1940
Imitation Jewelry7117 0000
Gold coins7118 0000

Is an E-way bill required for the Gold movement?

As per the Government recommendation on Sept 2022, E-Way Bill generation has been provisioned for the movement of Gold (HSN Chapter 71) for all Intrastate and Interstate transactions. The taxpayers of the state may generate the E-Waybill for Gold as per the notification issued by their respective states. The e-Waybill for Gold is available as a separate option in the main menu on the E-way bill portal. The e-Waybill for Gold has all the same parameters as that of a normal e-waybill except that such e-waybills will not be updated with Part-B details. The validity of such an e-Waybill is calculated based on the pin-to-pin distance of origin and destination.

For generating E-Waybill for Gold it is mandatory that all the items must belong to the HSN Chapter 71 only. In case of items belonging to another HSN chapter along with HSN chapter 71 exist, then it may be treated as a normal e-Waybill and may be generated along with Part-B details.

The changes in functionalities with respect to e-Waybill for Gold are as follows:

  1. No Part-B details can be updated
  2. Transporter update is not allowed
  3. Consolidated EWB cannot be generated
  4. Extension of e-waybill is allowed without updating Part-B details
  5. The multivehicle facility is not allowed

However, there is no change in cancellation and rejection of e-waybill.

How to measure Gold?

The weight of gold is measured in troy ounces (1 troy ounce = 31.1034768 grams), while Karat represents the purity of gold.

Following is the fineness scale which is used while defining the purity of gold:

24 k99.9% pure
22 k91.6% pure
18 k75.0% pure

What is the rate of GST on Gold Import?

International imports are not subject to GST. Thus if a GST-registered business/individual imports gold from outside of India, instead of paying GST on gold, a customs duty at the rate of 12.5% (Increased from 10% to 12.50% in 2019) is payable on gold imports made in the form of semi-finished/raw gold as well as gold bars.

This cost is passed on to the end-user and tax is applicable on top of any customs duty that may have been paid by the importer of the gold.

What is the impact of the implementation of GST on gold?

Prior to the implementation of GST on gold at 3%, the effective tax rate on the value of gold was 2% (1% VAT + 1% service tax), thus, GST implementation on gold at 3% has increased the price of only marginally for gold buyers.

On taking into account, the 5% GST on making charges of gold jewelry, as seen in the above case, the effective increase in taxes is around 2% after GST on gold was implemented.

This increase in the price of gold jewelry is in line with efforts to reduce India’s gold imports and lower the country’s current account deficit.

This is because we are a net importer of this precious metal and a majority of the gold imported is used in jewelry making.

From the seller’s perspective, India’s gold market is largely unorganized, with the organized sector accounting for a relatively smaller portion of the market.

Even though the introduction of GST on gold has increased transparency, this benefit is only applicable to the organized sector.

As a result, some industry experts believe that smaller jewelers may move into the unorganized sector to avoid paying and charging GST on stone sales.

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