Gold Making Charges: How to Calculate Making Charges on Gold?

Gold is a symbol of status, wealth and influence. In India, gold also holds immense sentimental, cultural and financial importance. During festivals and celebrations, gold sales reach their peak. The making charges of gold jewellery are one of the main factors that determine the total cost when someone buys it. Therefore, it's important to clearly understand these charges and how they are calculated if you plan to buy gold jewellery for any purpose. Keep reading to learn more about it.

Gold Making Charges In India

Making charges on gold refers to the cost of producing jewellery from raw gold. It includes the cost of designing, conceptualising and making jewellery.

An important point to remember is that there is no fixed price for gold in India. Gold prices vary from shop to shop, jeweller to jeweller, and city to city, mostly due to the making charges. Usually, a city has an association which sets the price of gold every new day. Overall, though, there isn’t any drastic variation as common factors such as taxes and purity determine the cost of gold jewellery. 

Final price of gold you buy can be expressed with the following formula:

Final price= Price of gold per gram x weight in grams + making charges + GST on price of jewellery and making charges

Factors Influencing Making Charges

Let us look at factors which influence gold jewellery making charges.

• Quality and Purity of Gold

The creativity and effort required to make the jewellery depend on the quality and purity of raw gold. You can find out the purity of gold by checking the Bureau of Indian Standards (BIS) hallmark.  

• Craftsmanship

The more complex a design is, the more will be the making charges. For example, wedding jewellery has higher gold making charges per gram as making them requires significant skill and craftsmanship. Similarly, studded jewellery has more making charges than plain gold jewellery.

• Transportation and Handling Cost

Gold making charges include the cost of storing, packing, moving, and transporting gold. Any delay due to late transportation will also be included in it.

How To Calculate Making Charges For Gold

Understanding how the making charges of gold is calculated is important to help you make an informed decision. Gold making charges are calculated in the following 2 ways:

• Cost Per Gram Of Gold

In this case, the price of gold is fixed per gram. Weight of the gold you purchase will be multiplied by the rate to arrive at gold making charges per gram.

• Percentage

Here the gold making charge is calculated as a percentage of the total value of the gold you purchase. The higher the percentage, the more will be the charge.

Making Charges On Gold Examples

Let us consider some examples to see how making charges are calculated in real life.

• Calculation By Using A Flat Rate

If you buy 10 g of gold and the seller uses a flat rate of Rs. 500/g to calculate the making charge, then the making charge you will pay is Rs. 10 x 500 = Rs. 5000.

• Calculation By Percentage

Suppose you buy the Gold worth of Rs. 7,00,000. If the jeweller levies 10% as making charges, then making charges you will pay are 10% of Rs. 7,00,000 = Rs. 70,000.

GST On Gold Making Charges

Currently, a GST of 5% is levied on gold making charges. It is divided between the state and central governments. The 5% GST is also applicable to repairing of jewellery.

Wastage Charges for Gold in India

Wastage charges in gold jewellery are additional costs added to account for the small amount of gold lost during crafting, such as melting, cutting, and polishing. This loss is a regular part of making gold ornaments and is usually passed on to the customer as a percentage of the gold's weight.

Wastage fees usually run from 5% to 7% of the weight of the gold. Such fees would go higher than 10% in the case of complex or handmade designs, including the material wastage while crafting. The percentage varies depending on the complexity of the design and the jewellery policy.

Making Vs Wastage Charges

Traditional methods of making gold jewellery often lead to some amount of waste. It includes loss of gold due to cutting, shaping and melting. Gold dust is another form of wastage. To account for this loss, jewellers charge a fee called the wastage charge. However, today’s scientifically advanced methods of making jewellery have brought down the wastage of raw gold to some extent.

Thus, making charges refer to the cost of producing the jewellery from raw gold while wastage charge compensates for the loss of gold during the production process.

How to Identify and Avoid Hidden Charges

Some of the standard hidden charges while purchasing gold are: 

• Melting & Purity Testing Fees: These charges are applied to check and refine gold purity.
• Weight Discrepancy: Inaccurate weighing scales may result in reduced gold weight.
• Lower Gold Rate: Sellers may use a rate lower than the current market price.
• No Price Breakdown: An unclear invoice may conceal additional deductions.

As a customer, you must make informed decisions to get the best gold from the market. Understanding the gold making charges will help you in bargaining for the best prices. A fixed rate is preferable when the gold prices are moving up while a percentage calculation is best suited to a fall in prices.

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