GST and Making Charges: Your Final Gold Bill

That structure matters because the rate you see advertised is only the first line. A shop that advertises a low rate can still give you a high total if its making charge is high, and a shop with a slightly higher rate can be cheaper overall if its making charge is low. Always compare totals, not headline rates.

A worked example

Take 8 grams of 22K gold at a benchmark of 11,375 rupees per gram. The metal cost is 91,000 rupees. Suppose the making charge is 10% of the metal cost, which is 9,100 rupees. The subtotal is 1,00,100 rupees, and GST at 3% on that subtotal is 3,003 rupees. The final bill is 1,03,103 rupees.

Change one number and the total moves. A making charge of 20% instead of 10% adds 9,100 rupees to the metal-plus-making subtotal, and GST rises with it, so the final bill rises by about 9,373 rupees. That is why the making charge, not the daily rate move, is usually the biggest thing you can negotiate or compare between shops.

What making charges should be

Making charges vary by design. A simple chain or bangle takes less work than a detailed temple necklace or a stone-set ring, so it should cost less to make. Making charges are quoted as a percentage of metal cost or as a fixed amount per gram. Neither format is wrong, but you should be able to convert one to the other: a fixed charge per gram divided by the per-gram rate gives you the percentage.

Ask two questions: is the making charge on the whole piece or per gram, and does it apply to the metal weight only or to the total weight including stones? Stones are not gold, so a making charge or metal rate applied to stone weight inflates the bill. A clear jeweller will answer both questions without hesitation.

GST: what it covers and what it does not

GST on gold jewellery is 3% on the value of the gold plus the making charge. It is not charged on the rate alone, and it is not a jeweller's invention: it is the tax rate set for gold jewellery in India. Your bill should show GST as its own line, so you can check that 3% has been applied to metal plus making, not to some larger figure.

Keep the bill. It proves the purity, weight, rate, making charge and GST you paid, and it is what you will need if you exchange or sell the piece. If a shop offers a lower price for a bill without GST, walk away: you lose the proof of purchase, the hallmark trail and any easy resale, and the saving is rarely worth it.

Comparing two shops fairly

To compare two shops, ask each for the same thing: the metal cost for your weight and purity, the making charge, and the GST, as three separate lines. Add them up yourself. The shop with the lower total is cheaper, even if its headline rate looked higher. Shops that bundle everything into one figure make that comparison impossible, which is itself useful information.

Also ask whether the making charge is refundable on exchange. Some shops deduct the full making charge when you exchange a piece, while others return part of it. That policy matters if you plan to exchange the piece later, and it should be written on the bill or the exchange terms, not promised verbally.

Related Pages

Today's gold rate in India · Today's 22K rate · Gold price calculator · Gold rate in Hyderabad · Gold rate in Bangalore · All blog posts

Sources: Central Board of Indirect Taxes — GST on gold

Benchmark rates only, before GST and making charges. Not investment advice.