Do you have to pay GST on both the gold and the making charges when purchasing jewellery? Find out what the government's rules say..

When purchasing jewellery, you are not required to pay separate GST on the cost of the gold and the making charges. According to government regulations, a uniform GST rate of 3% is applied to the total value of gold, silver, or diamond jewellery. It makes no difference to the tax liability whether or not the making charges are shown separately on the invoice. This has been clarified in the 'Frequently Asked Questions' (FAQ) on 'Gems and Jewellery' issued by the Central Board of Excise and Customs (CBEC) as part of its GST sectoral series—a document that remains available in the government's official FAQs to this day.

What has the government clarified?

The government's FAQ addresses a specific query raised by jewellers: How is GST applied when a customer purchases gold, diamond, or silver jewellery (for instance, a gold chain) and the invoice lists the cost of the gold and the making charges separately? Is the 3% GST applied to the entire amount, or is it 3% on the cost of the gold and 5% on the making charges?

The government's response is clear: a 3% GST is levied on the total transaction value of the jewellery, regardless of whether the making charges are itemized separately.

How much GST applies to a chain worth ₹1.40 lakh?

Let’s consider an example. Suppose you purchase a 10-gram gold chain, where the cost of the gold is ₹1,28,000 and the making charges are ₹12,000, bringing the total price to ₹1,40,000. Under the current rules, a 3% GST is applied to this entire amount, which totals ₹4,200.

If, instead, GST were applied separately—3% on the gold and 5% on the making charges—the tax would be ₹3,840 on the gold (₹1,28,000) and ₹600 on the making charges (₹12,000), resulting in a total GST of ₹4,440. In that scenario, the customer would have been charged an additional ₹240. According to the government's FAQs, this approach is incorrect. Customers should only be charged 3% GST on the total price.

So, where does the mention of 5% GST come from?

In the market and on various websites, one often sees statements like "3% GST on gold and 5% GST on making charges." This is what causes confusion for customers. In reality, the 5% figure relates to the process of manufacturing jewellery—specifically, the transaction between a jewellery business owner and an artisan (job worker).

This rule applies when a jewellery business owner provides gold as raw material to an artisan (job worker), who then crafts it into finished jewellery and returns it. According to the FAQs, if the artisan is registered under GST, they are required to pay 5% GST only on their service charges (i.e., their labour/making charges). The jewellery business owner can claim an input tax credit for this GST and use it to offset the GST liability on the sale of the finished jewellery.

If the artisan is exempt from GST registration, the jewellery business owner must pay the GST themselves under the "reverse charge" mechanism. This applies to the jewellery crafted by the artisan using the metal provided by the business owner. The business owner can also claim an input tax credit for the tax paid in this manner. In short, this 5% charge is not added separately to the bill of a customer purchasing finished jewellery from a retail store.

The 3% GST rate remains unchanged even after "GST 2.0"

In September 2025, significant changes were made to tax slabs under what is referred to as "GST 2.0," but the jewellery sector remained unaffected. During its 56th meeting held on September 3, 2025, the GST Council decided to maintain the GST rate for the gems and jewellery sector at 3%.

The clarification regarding making charges also remains in effect to this day. The existing FAQ on Gems and Jewellery provided by Invest India clarifies that a 3% GST applies to the total transaction value of jewellery—regardless of whether the making charges are shown separately or included in the total price.

Since when has the 3% GST been in effect?

According to the FAQ, a 3% GST on gold and silver has been in effect since July 1, 2017. During the transition from VAT to GST, it was mandated that a 3% GST be charged to customers even on gold and silver stocks held by banks or nominated agencies as of July 1, 2017.

Specific rules also apply to precious metals imported from abroad. Every import of precious metals is subject to a 3% IGST (Integrated Goods and Services Tax) in addition to the Basic Customs Duty. Banks are eligible to claim this IGST as an input tax credit. As of May 13, 2026, the customs duty on gold stands at 15%.

What should you keep in mind when purchasing jewellery?

For customers buying ready-made jewellery from a store, the rule is straightforward: a 3% GST applies to the entire value of the gold, silver, or diamond jewellery. The tax rate remains the same, whether the making charges are listed separately on the bill or bundled into the total amount.

When receiving your bill, simply ensure that the 3% GST has been applied to the total value. For instance, this amounts to ₹4,200 on jewellery worth ₹1,40,000, and ₹6,000 on jewellery worth ₹2 lakh. In cases such as having jewellery crafted by providing your own gold, or getting jewellery repaired, the situation may differ; therefore, it is advisable to ask the jeweller for a clear explanation of the tax base used in the bill.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.