GST on Silver: Tax Rates, HSN Code and Calculation

Before GST was implemented silver was taxed by 1% excise duty and 1% VAT and this tax structure varied based on state regulations. The tax structure for buying and selling silver was complicated! However, when GST was introduced, it reduced these multiple taxes and introduced a flat 3% GST rate under the current tax system.  

Let’s understand the GST rate for different silver products with different HSN codes and learn how to calculate taxes with examples.  

GST Rates on Silver with HSN Code

Businesses can easily follow tax rules under GST due to the standardised HSN (Harmonised System of Nomenclature) code 7106 for silver items. However, there are different HSN codes defined for various forms of silver products, such as silver powder, silver sheets, silver bars, etc. This helps avoid confusion, simplifies tax filing, and makes the trade process smooth. 

Let’s look at GST rates on various silver products, along with their HSN codes. 

The types of taxes imposed on silver under the GST law include CGST, SGST/UTGST and IGST, depending on the place of supply. It is in line with taxes imposed on any other precious metals.

How to Calculate the Silver Price

The final price of silver depends on factors such as taxes, hallmarking, and making charges. Use the below formula to calculate the price after taxation. 

Silver price = (Silver price per gram x Volume of silver purchased x Purity of the silver) + 3% GST

This may also include making charges with GST again. 

Let’s say you’re buying 1% purity silver of 100 gm. 

Price of silver = (95 x100 x1) = Rs.9,500

GST charges =  3% (95 x100 x1) = Rs.285

Total price of silver = 9,500 + 285 = Rs.9,785

Let’s assume the making charges for the jewellery is 5%. 

So, the total price will be = Rs.9,785 + 5% of Rs.9,785 = Rs.10,274.25

The formula provides buyers with transparent cost information about the silver they purchased relative to both its weight and purity levels.

Let’s see how GST has influenced its overall cost and taxation.

Impact of GST on Silver

Here is a comparison table of silver prices before and after GST to understand how it impacts buyers' current purchasing power. 

With GST, the final price of 1kg of silver has increased due to the 3% GST on silver and additional GST on making charges.