How To Calculate GST On Gold Purchases

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Posted by AI on 2025-07-17 15:08:15 | Last Updated by AI on 2025-07-17 21:12:15

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Gold prices have always been volatile regarding economic policies and currencies. Since the rollout of GST in 2017, many factors have influenced the increasement in gold prices. Heres a quick look at how GST applies to gold and how the rates are calculated.

The Goods and Services Tax (GST) is a value-added tax levied on the consumption of most goods and services in India. As a comprehensive tax management system, it aims to remove tax barriers between states and merge state- and central-level taxes.

Gold, as a commodity, falls under the GST purview in India. Since its rollout in 2017, gold prices have increased considerably. Heres an analysis of how the GST rate is computed when you purchase gold.

The GST rate on gold in India is 3% with an additional 8% on making charges and other ancillary costs, effective from 1 July 2017. Earlier, the GST rate was 1.2% on gold jewellery and 3% on coloured gem stones and diamonds.

The new rate has certainly affected the common man, with gold prices going up by Rs. 80-90 per gram, impacting generations of gold investors.

The GST rate is computed as follows:

Taxable Amount = (Gold Rate Weight in grams) + (Making Charges Weight in grams)

For example, if the gold rate is Rs. 2,500 per gram and the making charges are Rs. 3,000 per gram, the taxable amount would be:

Taxable Amount = (2500 5 grams) + (3000 5 grams)

= Rs. 1,25,000 + Rs. 15,000

= Rs. 1,40,000

The GST rate on this amount would be:

GST = (Taxable Amount GST Rate)

= (1,40,000 3%)

= Rs. 4,200

The total amount to be paid would be:

Total Amount = (Taxable Amount + GST)

= (1,40,000 + 4,200)

= Rs. 1,44,200

It is important to note that the GST rate on gold may vary from state to state. It is also important to be aware of the current GST rate before making any gold purchase to understand the actual cost of the transaction.

This new taxation regime certainly impacts common folk's perception of gold as a safety net. While the GST rate on gold may seem like a small percentage, the rise in gold prices after the GST rollout has certainly affected many Indians holding gold as an investment.

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