In India, the Goods and Services Tax (GST) rate on gold purchases is set at a standard rate of 3%. This applies to all forms of gold, including jewellery, coins, and bars. The GST is split equally between the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST), each accounting for 1.5%. For example, if you buy gold worth ₹1,00,000, the GST amount would be ₹3,000, making the total cost ₹1,03,000. It's essential to factor in this tax when planning your gold purchases to avoid any surprises.

No, the GST rate remains consistent across various types of gold. Whether you're purchasing 24 carat gold, 22 carat gold, or even digital gold, the GST applied is uniformly 3%. This simplifies the purchasing process for consumers, as you won't have to calculate different tax amounts based on the gold's purity or form. Additionally, this standardization helps in maintaining transparency in gold transactions, making it easier for buyers to understand the costs involved.

When it comes to gold jewellery, GST is applied not only on the value of the gold itself but also on the making charges. This means that the total cost of the jewellery, which includes both the gold price and the charges for craftsmanship, is subject to a 3% GST. For example, if you purchase a piece of gold jewellery worth ₹50,000 with making charges of ₹5,000, the total amount subject to GST will be ₹55,000, resulting in a GST of ₹1,650. Therefore, it's important to consider both aspects when budgeting for gold jewellery purchases.

On July 23, 2024, the Finance Ministry announced significant changes to custom duties on gold imports, reducing the Basic Custom Duty (BCD) from 10% to 5%, along with a decrease in the Agriculture Infrastructure and Development Cess (AIDC) from 5% to 1%. This brings the total custom duty from 15% down to 6%. These changes are aimed at lowering the overall cost of gold for consumers and may have a positive impact on gold pricing in the market. If you're considering buying gold, this reduction could translate into savings.

Gold investment schemes such as Gold Exchange Traded Funds (ETFs), Sovereign Gold Bonds, and Gold Mutual Funds are generally exempt from GST on the gold content itself. However, any associated service fees or management charges in these schemes may attract an 18% GST. This means that while the investment in gold itself may not incur GST, the costs related to managing or operating the investment will still be subject to tax. It’s crucial for investors to be aware of these charges when evaluating the total cost of investing in gold.

Gold merchants and jewellers can take advantage of Input Tax Credit (ITC) on the GST paid for raw materials, including gold used for manufacturing jewellery. This means they can claim a credit for the GST they’ve paid on their purchases, which can then be offset against the GST they collect on sales. Furthermore, this extends to any job work costs incurred, including those from unregistered job workers, under the reverse charge mechanism. By utilizing ITC, merchants can improve their cash flow and reduce overall tax liability, making their business operations more efficient.

When it comes to transactions involving second-hand gold, GST is charged only on the profit margin from the sale, rather than the entire sale price. This was clarified by the Karnataka Advance Ruling Authority, which follows Rule 32(5) of the CGST Regulations. For instance, if a jeweller buys second-hand gold at ₹30,000 and sells it at ₹35,000, GST will apply only to the ₹5,000 profit margin, not the full selling price. This regulation is beneficial for both sellers and buyers, as it reduces the overall tax burden on second-hand gold transactions.