How Much GST on Gold in India? Rates, Calculation & Examples

If you're planning to buy gold jewellery or invest in coins, the final cost depends on more than the spot price. Per the Goods and Services Tax Act, 2017, the current GST rate is 3%. We'll explain how much GST on gold affects your wallet when you buy, pledge, or exchange gold, and help you understand whether pledging gold for a loan is cheaper than selling it. This matters especially if you're exploring gold as an asset to pledge for financing.

At a Glance

Understanding how much GST on gold applies to your purchase helps you compare costs and make smart financial decisions. The GST on gold is 3%, uniformly applied to all purity levels (18K, 22K, 24K) and product types (jewellery, coins, bars). Making charges on gold jewellery attract a separate 5% GST. Pledging gold as loan collateral triggers zero GST, making it tax-neutral compared to selling your gold. Exchanging old gold for new purchases carries partial GST exemption on the old piece value.

How Is GST Applied to Gold Jewellery?

A gold jewellery purchase involves two tax components:

Gold value component:

• Attracts 3% GST regardless of purity
• Calculated on the weight and spot price per gram
• Appears as 1.5% CGST and 1.5% SGST on your invoice

Making charges component:

• Attracts a separate 5% GST on the artisan's fee
• Varies by design complexity (12% to 30% of gold value)
• Plain jewellery has lower making charges than ornate bridal designs

Example calculation for a 10-gram piece at Rs 13,675 per gram:

• Gold value: Rs 1,36,750
• GST on gold (3%): Rs 4,102
• Making charges at 15%: Rs 20,513
• GST on making charges (5%): Rs 1,026
• Total with all taxes: Rs 1,62,391

Always verify your invoice shows both GST lines separately: one for gold at 3%, one for making charges at 5%. A compliant bill never blends these into one percentage.

Does GST Rate Change With Gold Purity?

No. Whether you buy 18K, 22K, or 24K gold, the GST rate is always 3%. What changes is the base price per gram.

24-karat gold (pure) costs the most per gram. 22-karat, India's standard jewellery purity, costs less because it contains alloy metals. 18-karat gold contains more alloy and costs least per gram.

A 10-gram comparison shows how purity affects the final GST amount in rupees:

The GST rate stays the same at 3%, but the total rupee amount varies because the base price differs.

What About Coins, Bars, and Gold Loans?

Gold bars and coins follow the same 3% GST rule as jewellery with one key difference: no making charges. When you buy a 10-gram bar, the price is simply (gold value) × 1.03.

Pledging gold for a loan is the key advantage for borrowers. Per GST Council Resolution No. 22/2017, when you pledge gold as collateral, there is no GST event. A pledge is not a supply under GST law. You only pay the loan interest rate. If you borrowed Rs 5,00,000 against gold, zero GST applies to that transaction. This makes a gold loan tax-efficient compared to selling your gold and rebuying it later, which would cost you 3% GST twice.

Exchanging old gold also reduces your GST burden. When you hand over old jewellery for a new piece, the jeweller doesn't charge GST on the old gold's value. GST applies only to the net new amount. If you trade in gold worth Rs 50,000 toward a Rs 80,000 piece, you pay GST only on the Rs 30,000 difference.

Frequently Asked Questions

How much GST is charged on gold per gram?

The GST percentage is always 3%, but the rupee amount depends on daily prices. At Rs 13,675 per gram (22K), you pay Rs 410 per gram in GST. At Rs 14,918 per gram (24K), it's Rs 447 per gram. Spot prices change daily, so your per-gram tax cost varies.

What is the GST rate on 22 carat gold?

The GST on 22 carat gold is 3%, same as 18K and 24K. The base price per gram is lower than 24K because 22K contains alloy metals. The 3% is calculated on this lower base price.

What is the GST rate on 24 carat gold?

The GST rate on 24 carat gold is 3%, identical to other purities. 24K has no alloy and commands the highest per-gram price. A higher base price means larger GST in rupees, but the rate remains 3%.

How do I calculate the total cost of a gold purchase?

Use this formula: Final price = (weight × rate) + making charges + [(weight × rate) × 0.03] + [making charges × 0.05]. For a bar with no making charges, simply multiply the gold value by 1.03.

Is there GST when I pledge gold for a loan?

No. Pledging gold as loan collateral triggers zero GST. The pledge is not a supply under GST law. You pay only the loan interest, not any GST on the principal.

Can I reduce GST by exchanging old gold for new?

Yes, through an old-gold exchange, you reduce your GST burden. GST applies only to the net new value. If your old jewellery is worth Rs 50,000 and the new piece costs Rs 80,000, you pay GST only on the Rs 30,000 net addition.

What happens to GST if my gold loan defaults?

If you default and the lender auctions your gold, GST may apply on the sale proceeds. However, this tax falls on the lender's sale transaction, not on you as the borrower.

Should I take a gold loan or sell gold to raise funds?

A gold loan is usually cheaper for short-term needs because you avoid the double GST cost of selling and rebuying. You also retain the gold, so you benefit if prices rise. If you need funds permanently, selling costs 3% GST but frees capital long-term.

Comparison: GST Outcomes Across Gold Transactions

Understanding these GST implications helps you make smart decisions about purchases and financing. If you're comparing ways to raise funds or manage your gold holdings, we can help you find the right personal loan or gold loan option on our site that matches your needs and timeline.