GST on Jewellery Retailers India 2026 — Gold 3%, Making Charges 5%, ITC Rules

Jewellery retail is one of the most GST-sensitive businesses in India. The rates differ for gold, silver, diamonds, and making charges. Getting the GST calculation wrong on a high-value jewellery invoice can result in significant penalties. Here is the complete guide for jewellery retailers for 2026.

GST Rates on Jewellery — Quick Reference

How to Calculate GST on a Jewellery Invoice

Scenario 1: Making charges included in price

• Gold value: ₹1,00,000
• Making charges: ₹10,000 (included in total)
• Total invoice value: ₹1,10,000
• GST: 3% × ₹1,10,000 = ₹3,300

When making charges are not separately stated, the entire invoice value attracts 3% GST.

Scenario 2: Making charges charged separately

• Gold value: ₹1,00,000 → GST: 3% = ₹3,000
• Making charges: ₹10,000 → GST: 5% = ₹500
• Total GST: ₹3,500
• Total invoice: ₹1,13,500

Charging making charges separately results in slightly higher GST (₹3,500 vs ₹3,300). Most jewellers include making charges in the gold price to simplify billing.

GST on Exchange of Old Gold

When a customer exchanges old gold for new jewellery:

• GST applies only on the net value (new jewellery value minus old gold value)
• Old gold is not a "supply" — it is a return of goods

Example:

• New jewellery: ₹1,00,000
• Old gold exchanged: ₹40,000
• Net value: ₹60,000
• GST: 3% × ₹60,000 = ₹1,800

Important: The old gold must be valued at the current market rate on the date of exchange.

ITC for Jewellery Retailers

Jewellery retailers can claim ITC on:

• Gold purchased from registered suppliers (3% GST)
• Silver and other metals
• Diamonds and precious stones
• Job work charges (5% GST)
• Packaging materials
• Business equipment and software

ITC cannot be claimed on:

• Gold purchased from unregistered suppliers (no GST invoice)
• Imports (customs duty, not GST)
• Personal expenses

Important: ITC on gold purchased from unregistered dealers (common in the jewellery trade) is not available. This is a significant compliance challenge for jewellers who buy from small artisans.

GST on Job Work for Jewellery

When a jeweller sends gold to a karigar (artisan) for making jewellery:

• Job work charges attract 5% GST
• The jeweller (principal) can claim ITC on job work charges
• The karigar must be GST-registered if annual turnover exceeds ₹20L

Challan for job work: When sending gold to a karigar, issue a delivery challan (not a tax invoice). The gold must be returned within 1 year (or 3 years for capital goods).

GST Registration for Jewellers

Composition scheme for jewellers: Jewellers with turnover up to ₹1.5 crore can opt for the composition scheme:

• Pay 1% GST on turnover (for manufacturers) or 1% (for traders)
• No ITC
• Simplified quarterly filing

Hallmarking and GST

From June 2021, hallmarking of gold jewellery is mandatory for jewellers with annual turnover above ₹40L. Hallmarking does not affect GST rates — the 3% rate applies regardless of hallmarking status.

GST on Import of Gold

Gold imported by jewellers:

• Basic Customs Duty: 6% (reduced from 15% in Budget 2024)
• Agriculture Infrastructure and Development Cess (AIDC): 5%
• IGST: 3%
• Total import cost: ~14% above the gold price

ITC on IGST paid on import is available.

GST Returns for Jewellers

Common Compliance Issues for Jewellers

1. Buying from unregistered suppliers — No ITC available; increases cost
2. Not issuing proper invoices — Every sale above ₹200 requires a GST invoice
3. Wrong HSN code — Diamond jewellery (7113) vs unset diamonds (7102) have different rates
4. Not accounting for old gold exchange — Must calculate GST on net value
5. Job work challan not maintained — Required for gold sent to karigars

Frequently Asked Questions

Is GST applicable on second-hand gold jewellery?

Yes. When a jeweller buys old gold from a customer and resells it, GST applies on the resale. However, if the jeweller is buying from an unregistered individual (not a business), the purchase is not subject to GST.

What is the GST rate on gold coins sold by banks?

Gold coins sold by banks attract 3% GST, same as gold jewellery. Banks are required to charge GST on gold coin sales.

Can a jeweller claim ITC on the gold used in jewellery making?

Yes, if the gold was purchased from a GST-registered supplier with a proper tax invoice. ITC on gold purchased from unregistered suppliers is not available.

Is GST applicable on gifting gold jewellery?

Gifting gold jewellery between individuals is not a supply under GST (no consideration). However, if a business gifts gold jewellery to employees or clients, it may be treated as a supply and attract GST.

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