The gold and jewellery sector is one of the largest industries in India — and Kerala is one of its biggest markets. GST on gold and jewellery has specific rules covering the gold value, making charges, job work and the popular practice of exchanging old gold for new jewellery. Here is the complete guide for jewellers and consumers.
GST Rate on Gold and Jewellery
- Gold (bars, coins, ornaments — unworked or semi-worked): 3% GST
- Making charges / wastage charges on jewellery: 5% GST (on the making charge component)
- Silver: 3% GST
- Platinum: 0.25% (customs + GST) — special regime
- Diamonds and precious stones (unset): 0.25% GST
- Diamond and gemstone set jewellery: 3% GST on the full value
How GST is Applied on a Jewellery Invoice
Example: A customer buys a gold chain costing ₹50,000 (gold value) with making charges of ₹3,000:
- GST on gold value (₹50,000 × 3%) = ₹1,500
- GST on making charges (₹3,000 × 5%) = ₹150
- Total GST = ₹1,650
- Total invoice value = ₹54,650
Old Gold Exchange — GST Treatment
When a customer exchanges old gold to buy new jewellery, only the net consideration (new jewellery value minus old gold value given) attracts GST — provided the old gold is received back as part of the same transaction. However, if the jeweller buys old gold and separately sells new jewellery, full GST applies on the new jewellery and the jeweller must account for the old gold separately.
Job Work for Jewellery — GST at 5%
When a jeweller sends gold to a job worker (artisan/karigar) for making jewellery, the job work service attracts 5% GST on the job work charges (not on the gold value). Proper documentation (delivery challan, job work agreement) is essential. The gold sent for job work must be returned within 1 year (6 months for inputs) or the job work is treated as supply.
ITC for Jewellers
Jewellers can claim ITC on GST paid on raw material purchases (gold, silver, diamonds), machinery, tools and shop rent. However, ITC on gold ornaments purchased from unregistered suppliers (under RCM) requires careful documentation. GST on capital goods (display cases, machines) can be claimed as ITC over 5 years.
Conclusion
GST on gold and jewellery involves multiple rates and complex supply scenarios. SPOTON provides dedicated GST advisory and return filing services for Kerala's jewellery businesses. Contact us for expert jewellery GST compliance in Calicut and across Kerala.
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