GST on Gold: GST Rate on Gold Purchase, Jewellery, Coins, Biscuit & Bar

With the implementation of Goods and Services Tax (GST), the taxation on gold in India has changed significantly. 3% GST applies to both 24 carat and 22 carat gold, affecting physical gold purchases. This article explains the GST rates on gold, and how GST applies when buying gold.

Latest Updates

23rd July 2024
In the Union Budget 2024, the Finance Minister announced to reduce the custom duty on import of Gold by 9% and the new rates were subsequently notified by the CBIC.

Type of Custom Duty/ Rates	Gold Bar and Findings		Gold Dore
	Old	New	Old	New
Basic Custom Duty (BCD)	10%	5%	10%	5%
Agriculture Infrastructure and Development Cess (AIDC)	5%	1%	4.35%	0.35%
Total	15%	6%	14.35%	5.35%

GST rates on gold?

Usually gold is available in 24 carat and 22 carat in India. 

24 carat gold GST rate in India

GST on 24 carat physical gold is set at 3%. This rate applies to all forms of pure gold—whether in the form of gold bars, coins, or gold jewelry.

22 carat gold GST rate in India 

GST on 22 carat physical gold is also 3%. This applies to the gold content in 22-carat gold jewelry, bars, or coins.

GST on digital gold 

3% GST is charged for digital gold purchase.

GST on gold investment schemes

Gold investment schemes like Gold ETFs, Sovereign Gold Bonds, and Gold Mutual Funds are generally not subject to GST on the gold itself. However, GST applies to service charges, management fees, or other charges associated with these schemes. Therefore, investors must ensure that any service fees are accounted for, as they may attract 18% GST.

GST on gold HSN codes 

GST calculation on gold

Below example compare gold prices under pre-GST and the GST regime:

1. **Assuming to be 1%, may vary with the state/UTs

Availability of input tax credits for GST on gold business

The jeweller or gold merchant can claim Input Tax Credit (ITC) paid on the raw materials used, i.e., gold and other job work charges incurred. Even when the gold merchant pays tax on a reverse charge basis for supply from an unregistered job worker, they can claim the ITC on such tax.

Popular advance rulings on GST on gold under GST

• Karnataka AAR in the case of M/s Attica Gold Pvt. Limited in order KAR/ADRG/15/2020 dated 23rd March 2020

Matter/Issue:

The applicant gold company offers spot cash for gold and releases the pledged gold at the current market price registered under GST. In the case of second-hand purchase of gold from unregistered individuals if there is no change in the type/quality of the goods, then:

• Valuation: Whether the GST is charged only on the difference between the selling price and the purchase price, as provided in Rule 32(5) of the CGST Rules?
• ITC Claim: Whether the company can claim ITC if purchases are made from the dealer from whom the marginal scheme is applicable?

Ruling:

• Valuation: Yes, if the company raises an invoice as second-hand goods or deals in it without any change in form/type of the jewellery purchased, the valuation of the gold jewellery purchased from unregistered individuals will be as per Rule 32(5) of the CGST Rules. The valuation for GST is the difference between the selling price and the purchase price if it is positive. However, if the purchase price is more than the selling price, then no GST is levied. Moreover, non-availment of the input tax credit will be an additional condition.
• ITC Claim: If the purchase of second-hand gold jewellery is from a registered person, ITC is available. In such a case, the margin scheme, as discussed above, will not be available for the gold company on its further sale.

• Maharashtra AAR in the case of M/s Biostadt India Limited in order GST-ARA- 72/2018-19/B- 165 Mumbai dated 20th December 2018

Matter/Issue:

The applicant company is in the business of crop protection chemicals and hybrid seeds. It launched a sales incentive campaign -Kharif Gold Scheme 2018. In simple words, the scheme offers 10 gm and 8 gm gold coins to its customers for purchases above a certain quantity and for making minimum payments, respectively. The issue was as follows:

• ITC Claim: Whether the input tax credit can be availed on the procurement of gold coins used for conducting sales promotion?
• ITC Claim for similar schemes: Whether ITC is available for any other similar schemes

Ruling:

• ITC Claim: No, ITC is not available for claims for purchased gold coins. The distribution of gold coins is not the principal business of the taxpayer company in compliance with Section 16 of the CGST Act. Further, Section 17(5) on blocked ITC that prevails over Section 16 disallows ITC claims for disposal of any purchased goods as a gift. The distribution of gold coins under the scheme is also considered a ‘gift’.
• ITC Claim for similar schemes: No, ITC is not available for claims for any other similar schemes.

Read more: GST on Diamond Jewellery: Applicability, GST Rate and HSN Code