Before the implementation of the Goods and Services Tax (GST), the taxation system on silver in India was quite complex. Multiple indirect taxes such as excise duty and VAT were levied, and these often varied from state to state. Typically, silver attracted 1% excise duty and 1% VAT, making compliance and pricing cumbersome for both traders and buyers.
With the introduction of GST in July 2017, this multi-layered taxation structure was streamlined. A uniform GST rate of 3% is now applicable on silver, significantly simplifying tax compliance and ensuring transparency across the supply chain.
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GST Rate on Silver with HSN Code
Under GST, silver and its various forms are classified using the Harmonised System of Nomenclature (HSN). The primary HSN code for silver is 7106, but specific sub-categories exist for different forms of silver products.
This classification helps businesses accurately report transactions, avoid errors, and ensure smooth compliance.
GST Rates for Silver Products
| Silver Item | HSN Code | GST Rate |
| Silver (including gold/platinum-plated silver) in unwrought or semi-manufactured form or powder | 7106 | 3% |
| Silver powder | 71061000 | 3% |
| Unwrought silver | 710691 | 3% |
| Other unwrought silver | 71069100 | 3% |
| Silver grains | 71069110 | 3% |
| Other forms of silver | 71069190 | 3% |
| Semi-manufactured silver | 710692 | 3% |
| Sheets, plates, strips, tubes, pipes | 71069210 | 3% |
| Silver bars | 71069220 | 3% |
| Other semi-manufactured silver | 71069290 | 3% |
Types of GST Applicable on Silver
Depending on the nature of the transaction, different components of GST are applied:
- CGST + SGST/UTGST: Applicable for intra-state transactions
- IGST: Applicable for inter-state transactions
This structure is consistent with the taxation of other precious metals under GST.
How to Calculate the Price of Silver with GST
The final price of silver depends on several factors such as base price, purity, weight, GST, and making charges (in case of jewellery).
Formula:
Silver Price = (Price per gram × Quantity × Purity) + 3% GST
If jewellery is involved, making charges and GST on making charges must also be added.
Example Calculation
Let’s assume:
- Price per gram = ₹95
- Quantity = 100 grams
- Purity = 1 (i.e., 100%)
Step 1: Base Price
₹95 × 100 × 1 = ₹9,500
Step 2: GST @ 3%
3% of ₹9,500 = ₹285
Total Price (without making charges)
₹9,500 + ₹285 = ₹9,785
Step 3: Making Charges (5%)
5% of ₹9,785 = ₹489.25
Final Price
₹9,785 + ₹489.25 = ₹10,274.25
This method provides clarity to buyers regarding the exact cost breakup.
Impact of GST on Silver Prices
The introduction of GST has changed the overall cost structure of silver. While it simplified taxation, the total cost has slightly increased due to GST being applied both on the metal and on making charges.
Price Comparison: Pre-GST vs Post-GST (1 kg Silver)
| Particulars | Pre-GST (₹) | Post-GST (₹) |
| Base Price | 99,500 | 99,500 |
| Customs Duty (10%) | 9,950 | 9,950 |
| Subtotal | 1,09,450 | 1,09,450 |
| Excise Duty (1%) | 1,094 | – |
| VAT (1%) | 1,105 | – |
| GST (3%) | – | 3,284 |
| Subtotal | 1,11,649 | 1,11,734 |
| Making Charges (12%) | 7,920 | 7,920 |
| GST on Making Charges (5%) | – | 496 |
| Final Total | 1,19,569 | 1,21,150 |
GST has replaced multiple indirect taxes with a single 3% tax rate on silver. The use of HSN codes ensures uniform classification and easier compliance. While GST has simplified the taxation system, the overall cost of silver has marginally increased, especially due to GST on making charges. The new system promotes transparency, ease of doing business, and uniform pricing across India.
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