India’s gold buyers will continue paying 3% Goods & Services Tax (GST) on jewellery and bullion for now, even as a key panel has backed a sweeping GST rationalisation to two slabs (5% and 18%). The gems & jewellery industry is using the reform window to push for a reduction of the gold GST to 1–1.25%, arguing that high prices and taxes are cooling demand.
What you actually pay today
- 3% GST on jewellery/bullion: CBIC’s sectoral FAQs clarify that when a jeweller sells finished jewellery to a customer, GST @3% applies on the total invoice value (gold + making charges), whether or not making charges are shown separately. This is because the sale is treated as a composite supply with gold as the principal supply.
- 5% on job-work services (business-to-business): If a manufacturer outsources making to a registered job worker, the job worker charges 5% GST on the service; the principal can claim input tax credit. This 5% does not get added on top of a consumer bill when a jeweller sells finished jewellery; the retail sale still attracts 3% on the total jewellery value.
- Old jewellery sale by individuals: When customers sell old jewellery to a jeweller, it’s not a “supply” by the individual, so no GST is payable by the seller or under reverse charge to that extent. The jeweller typically records a purchase voucher for the old gold and issues a separate sale invoice for the new piece (on which 3% GST applies).
Quick bill example (illustrative): If a necklace is priced at ₹1,00,000 for gold + ₹5,000 making, the invoice value is ₹1,05,000 and GST is ₹3,150 (3%) — not 3% on gold plus 5% on making at retail. CBIC’s FAQ supports taxing the total jewellery value @3%.
Reform watch: Two slabs, “special rates” — will gold change?
A six-member Group of Ministers has accepted the Centre’s rate-rationalisation proposal to scrap the 12% and 28% slabs and converge to two rates — 5% and 18%; the government has also indicated it may retain “special rates” for a few items. Gold currently sits in a special 3% bucket. Whether gold stays at 3% or is revised will be a GST Council decision; no change has been announced yet.
Industry’s pitch: Cut GST to 1–1.25%
With domestic prices near records, jewellers say a lower GST could support demand and formalisation. The All India Gem & Jewellery Domestic Council (GJC) has asked the government to reduce gold GST to 1–1.25%, citing revenue-neutrality (pre-GST incidence was widely pegged at ~1–1.25%) and affordability.
A 1% cut is meaningful at ticket sizes common in India: on a ₹5 lakh purchase, every 1 percentage point drop in GST saves ₹5,000 directly on the bill, as consumer finance analyses have noted.
Customs moves already lowered landed costs
While GST is unchanged, customs duties have been eased to curb smuggling and align with global prices: in July 2024the government cut total customs duty on gold to 6% (via reductions in BCD/AIDC). The 2025 Budget maintained the 6% framework for bullion and trimmed tariff on jewellery/articles (HS 7113) to 20% from 25% effective Feb 2, 2025. These steps reduce the import-side tax load but do not alter the 3% GST at retail.
Why it matters now
- Demand under pressure: The World Gold Council expects India’s 2025 gold demand to slip to a five-year low (600–700 tonnes) amid high prices, despite some investment interest — sharpening the debate on taxes.
- Compliance vs. leakage: Industry argues that lower taxes on both customs and GST reduce incentives to move purchases off-books or via unofficial channels, aiding formalisation — a key stated goal of the GST revamp.
What buyers should check on invoices (right now)
- GST @3% on the total jewellery value (gold + making), not 3% + 5% at retail. If you see 5% added separately on making in a consumer sale, ask for the composite-supply treatment clarified by CBIC.
- Separate treatment is correct only for job-work between businesses (5% service). It should not be used to inflate a consumer bill.
- Old gold buyback should appear as a purchase voucher from the jeweller; your new jewellery sale is invoiced separately with 3% GST.
The bottom line
- Status quo: Gold remains at a special GST rate of 3% at retail; job-work services are 5% B2B.
- Policy watch: A two-slab GST rejig is advancing; the Council may keep “special rates” for select goods — gold included — but no change has been approved for gold so far.
- Outlook: If the Council cuts gold’s special rate (industry seeks 1–1.25%), consumer bills would fall instantly; until then, customs-side reductions have eased imports, not retail GST.
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