5 Critical Facts About GST on Gold 2026: Rate, Making Charges and Calculation Guide

India bought over 800 tonnes of gold in 2025. That is roughly Rs 6.5 lakh crore worth of purchases. Yet most buyers at the jewellery counter do not know they are paying two different GST rates on a single transaction.

GST on gold in 2026 is not one rate. It is two. The gold itself attracts 3%, and the making charges attract 5%. When these are not shown separately on your invoice, you either overpay without knowing it or receive an invoice that violates GST rules.

This guide covers every scenario: ready-made jewellery, gold coins, gold bars, digital gold, second-hand gold exchange, imported gold, and what changed with import duty in May 2026. The rates and HSN codes here are verified against CBIC notifications and GST Council decisions through June 2026.

Author note: As a GST and Digital Compliance Specialist at LegalDev with hands-on experience handling GST registration and return filing for jewellers and gold traders across India, I have put together this guide to cut through the confusion that most buyers and small jewellers run into at billing time.

What Is the GST Rate on Gold in 2026?

Gold sits outside the standard GST slab structure. After the 56th GST Council meeting in September 2025, most goods moved into two primary slabs: 5% and 18%. Gold stayed at 3%. The Council retained this rate deliberately to protect household buyers, small jewellers, and the millions of workers in India's jewellery sector.

The 3% rate is not a concession. It replaced the earlier combination of approximately 1% VAT and 1% excise duty, resulting in a modest increase from the pre-GST era. Raising it further was not on the table at the 56th or 57th Council discussions.

How Are GST and Making Charges Calculated on Gold Jewellery?

This is where most confusion begins. When you buy ready-made gold jewellery from a shop, the jeweller charges 3% GST on the total transaction value as a composite supply. When you place a custom order and supply your own gold, the job work charges attract 5% separately.

Example 1: Buying Ready-Made Gold Jewellery

Assume you are buying a 22K gold necklace. The gold weighs 20 grams. The gold rate is Rs 7,500 per gram. Making charges are Rs 800 per gram.

The GST component alone adds Rs 5,300 to your bill. On a composite invoice where everything is clubbed together at 3%, you would pay Rs 4,980 in GST. The correct split as per GST rules gives a different number. Always check that your invoice shows gold value and making charges as two separate line items.

Example 2: Buying Gold Bars or Coins

Gold bars and coins have no making charges. The formula is simple.

Example 3: Exchanging Old Gold for New Jewellery

When you exchange old gold at a jeweller, GST applies only on the net value added, not on the old gold you return.

This is a meaningful saving on exchange transactions. If you return 15 grams of old gold and need 20 grams total in the new piece, GST applies only on the 5 additional grams and the making charges.

 

What HSN Codes Apply to Gold Transactions?

 

Businesses with turnover above Rs 5 crore must use 8-digit HSN codes on all B2B invoices. Below Rs 5 crore, 4-digit codes are acceptable. The HSN code must appear on the invoice alongside the taxable value and the split GST amount.

One common mistake: when a jeweller melts old jewellery (HSN 7113) into gold lumps, the product changes classification to HSN 7108. This has ITC and margin scheme implications. A Karnataka AAR ruling (White Gold Bullion Private Limited, 2020) confirmed this classification change.

What Changed with Gold Import Duty in May 2026?

This is the most significant change in gold taxation in 2026. The import duty revision directly affects the base cost at which jewellers procure gold from overseas suppliers.

The 3% IGST paid on import is available as Input Tax Credit for registered importers, which they can offset against domestic gold sales. The customs duty component is not available as ITC.

If you are buying gold from a jeweller who imports, this change has likely already been passed on in the price. The GST rate on the domestic sale remains 3%. The higher import duty affects only the cost input, not the headline GST on the final sale.

How Does GST Apply to Digital Gold, SGBs, and Gold ETFs?

Not all gold investments carry the same GST treatment. The differences matter if you are choosing between physical, digital, and financial instruments.

Digital Gold

Digital gold bought through platforms such as Paytm, PhonePe, or MMTC-PAMP is treated as physical gold for GST purposes. A 3% GST applies at the time of purchase on the full transaction value. Storage fees, insurance premiums, and trustee fees also attract 3% GST.

Sovereign Gold Bonds

SGBs are government securities denominated in grams of gold. Since they are treated as securities and not goods, there is no GST at the time of purchase. They remain the most tax-efficient gold vehicle for investors who do not need physical delivery.

Gold ETFs and Gold Mutual Funds

Gold ETFs and gold mutual funds are financial instruments. No GST applies on the gold held within them. However, the brokerage or commission charged by the distributor or broker for buying or selling ETF units attracts 18% GST on that service charge.

GST Compliance Checklist for Jewellers and Gold Traders

Running a jewellery business under GST requires attention to invoicing, ITC claims, return filing, and e-invoicing obligations. These are the most common compliance gaps found during GST audits of jewellery businesses.

Invoice Requirements

• Show gold value and making charges as two separate line items on every invoice

• Use the correct HSN code: 7108 for bars, 7113 for jewellery, 7118 for coins

• Mention CGST and SGST separately for intra-state sales, or IGST for inter-state

• For B2B invoices above Rs 5 crore turnover, register on the Invoice Registration Portal and include IRN and QR code

• B2C invoices above Rs 25,000 must carry a dynamic QR code

ITC Rules for Jewellers

 

• ITC is available on gold purchased from registered suppliers for business use

• ITC is blocked under Section 17(5) on gold coins or jewellery given as promotional gifts or sales incentives

• For job work from unregistered workers, the jeweller pays 5% GST under Reverse Charge Mechanism and can claim that as ITC

• Reconcile GSTR-2B monthly before filing GSTR-3B to ensure ITC matches supplier-filed data

Return Filing Deadlines

Expert Perspective: Why Gold's 3% Rate Survived GST 2.0

The September 2025 GST 2.0 rollout moved most goods into a simplified 5% and 18% structure. Gold was an obvious candidate for rationalisation given its high unit value. Yet the GST Council kept it at 3%.

The reasoning is practical. India's informal gold economy is large. A rate increase would push more transactions into the grey market, reduce compliance, and hurt small jewellers who are already managing thin margins. The Council's decision reflects the same logic that kept gold's rate close to the pre-GST level when the system launched in 2017.

From working with jewellery businesses on GST registration and return filing, the most common problem is not the rate itself. It is the invoicing error where composite and job work supplies are mixed up, or where the HSN code is wrong. These errors trigger automated mismatches in GSTR-2B and lead to ITC rejections.

Frequently Asked Questions: GST on Gold 2026

1. What is the GST rate on gold in India in 2026?

The GST rate on gold is 3% on the value of gold. This applies to jewellery, coins, bars, and digital gold. Making charges on jewellery attract a separate 5% GST. These rates were not changed in the September 2025 GST 2.0 rollout.

2. Do I pay GST when I sell old gold to a jeweller?

If you are an individual selling personal gold to a registered jeweller, you do not pay GST. The jeweller handles the tax on their end. If the jeweller then resells the gold without changing its form, they may apply the margin scheme under Rule 32(5) of the CGST Rules and pay GST only on the profit margin.

3. Is GST charged on making charges separately?

Yes, for custom jewellery orders, making charges (job work) are taxed at 5% separately from the 3% on gold value. For ready-made jewellery bought off the shelf, the total bill is typically treated as a composite supply at 3%. The correct approach for custom orders is always to show two separate lines on the invoice.

4. Does GST apply to Sovereign Gold Bonds?

No. SGBs are government securities classified as financial instruments, not goods. There is no GST at the time of purchase or redemption. The interest earned on SGBs is taxable as income, and capital gains rules apply on redemption, but GST does not.

5. What is the HSN code for gold jewellery?

Finished gold jewellery falls under HSN code 7113. Gold in bars, biscuits, or ingots uses HSN 7108. Gold coins use HSN 7118. Using the wrong code on a tax invoice is a compliance error that can trigger GST notices.

6. What happened to gold import duty in 2026?

From May 13, 2026, import duty on gold increased from 6% to 15%. The structure is now 10% Basic Customs Duty and 5% AIDC. The 3% IGST on imports remains unchanged. This affects the landed cost for jewellers who import gold, though the domestic sale GST stays at 3%.

7. Can a jeweller claim Input Tax Credit on gold purchases?

Yes, a registered jeweller can claim ITC on gold purchased from a registered supplier, provided the goods are used for business purposes and all ITC conditions under Section 16 of the CGST Act are met. ITC is blocked on gold given as promotional gifts or samples under Section 17(5).

8. Is digital gold taxed differently from physical gold?

No. Digital gold bought through apps or platforms is taxed at 3% GST on the purchase value, just like physical gold. Storage and insurance charges also attract 3% GST. SGBs and gold ETFs are the exceptions as they are securities, not goods.

9. How do I check if my gold invoice is GST compliant?

A GST-compliant gold invoice should show: the jeweller's GSTIN, gold weight and purity, gold rate per gram, taxable value of gold, making charges as a separate line, CGST and SGST amounts separately (or IGST for inter-state), total invoice amount, and HSN code. An invoice that clubs all amounts and applies a single rate without separating these components may not comply with GST invoicing rules.

10. What is the GST on gold repair charges?

Repair and maintenance services for gold jewellery are taxed at 5% GST on the service charge. This is the same rate as making charges. The gold used in repair (if new gold is added) attracts 3% GST on the gold value.

 

Related Reading on gstregistration.co

 

• GST 2.0 New Rates 2026: Impact on Returns and Invoices -- gstregistration.co/blog/gst-2-0-new-rates-2026-impact-on-returns-invoices

• What Is HSN Code: Complete 2026 Guide to HSN Numbers, GST Rates and How to Search -- gstregistration.co/blog/what-is-hsn

 

Key Takeaways

 

• GST on gold in 2026 is 3% on the gold value and 5% on making charges. These two rates apply separately and must appear as separate line items on a proper GST invoice.

• Gold ETFs and Sovereign Gold Bonds carry 0% GST at purchase, making them more tax-efficient for investors who do not need physical gold.

• Import duty on gold increased to 15% from May 13, 2026. This raises the landed cost for importers but does not change the 3% GST on domestic gold sales.

 

Understanding GST on gold 2026 helps you verify your jewellery invoice before paying, choose the right gold investment format, and stay compliant if you are a registered jeweller or gold trader. If you have a specific compliance question, the team at LegalDev can help.