In this guide
Two numbers circulate about GST on gold jewellery, and both of them are real: 3% and 5%. What almost nobody explains is that they belong to two different transactions, and only one of those is the transaction you are in when you buy a chain across a counter.
Get that distinction wrong and you will either overpay quietly or argue with a shop about the wrong line on the bill. If you have not yet read how gold making charges are calculated, start there — this page picks up where the tax line begins.
The short answer
When a jeweller sells you a finished ornament, GST is 3%, charged on the gold value and the making charges added together. There is no second, higher rate sitting on the making-charge line.
That is not our own reading of the law. It is the answer the Central Board of Indirect Taxes and Customs gave to precisely this question in its published sectoral guidance for the gems and jewellery trade. The question put to the board even carried its own worked example — a 10-gram gold chain at a total of ₹30,000, of which ₹28,000 was the gold and ₹2,000 the making charges — and asked whether the shop should charge 3% on the total, or 3% on the gold value and 5% on the making. The board's answer runs to a single sentence: tax is payable at 3% of the total transaction value of the jewellery, whether the making charge is shown separately or not.
That last clause is the one doing the work. Printing the breakup on your bill is good practice — we do it, and you should insist on it wherever you shop — but itemising the making charges does not create a second taxable thing. It just makes the one supply legible.
The same answer covers silver and diamond jewellery. The question the board was answering was framed for gold, diamond and silver ornaments together, and the single rate it gave applies across all three. The rate follows the article, not the price of the metal in it.
Why jewellery is one supply, not two
A gold ornament is goods and labour fused into a single object, and GST law has a specific name for that: a composite supply. Where two or more supplies are naturally bundled and sold together in the ordinary course of business, and one of them is the principal supply, the whole bundle is taxed as though it were only the principal supply. For an ornament, the principal supply is the gold. The gold's rate therefore governs the entire bill.
The test is whether the two things are genuinely sold together in the ordinary way of trade. Nobody walks into a showroom, buys 20 grams of loose gold, and then separately commissions the shop to turn that metal into a necklace as an unrelated second transaction. The metal and the workmanship arrive as one ornament, on one tag, at one price. That is what "naturally bundled" means, and it is why a split into two taxable supplies does not survive contact with the counter.
Most of the other charges on a jewellery bill follow the same logic: anything forming part of the value of the ornament goes into the taxable value before the 3% is worked out.
| Line on the bill | Is it part of the one supply? |
|---|---|
| Gold value (net weight × rate) | Yes — this is the principal supply. |
| Making charges or value addition | Yes — the labour element of the same ornament. |
| Hallmarking charge, where billed | Yes — added before the 3% is calculated. |
| Stones set into the piece | Yes — the board's answer was given for gold, diamond and silver jewellery alike, and a studded ornament is still one article. |
Stones are where buyers most often brace for a second tax rate, and on a finished studded ornament there generally is not one: the piece is one article and its whole transaction value carries the 3%. The stone line is still worth arguing about, for a different reason — whether stone weight has been billed as gold weight, and what the per-carat rate is. That is a pricing question rather than a tax one, and it moves far more money than the tax treatment does.
Where the 5% figure actually belongs
The 5% is a real GST rate on jewellery work. It is simply not a rate that lands on a retail customer's bill.
Ornaments are rarely made by the shop that sells them. A jeweller sends metal out to a goldsmith — the karigar — who does the drawing, casting, filing, setting and polishing, and sends the finished piece back. The goldsmith is not selling gold. The gold was never his. He is selling labour performed on somebody else's metal, and GST law calls that job work. The services rate notification carries a specific entry for job work on plain and studded jewellery of gold and other precious metals, and that entry is charged at 5%.
So the 5% exists, and jewellers pay it. It appears on the invoice the goldsmith raises to the shop, and the shop takes credit for that tax against the tax it later collects from you. By the time the ornament reaches the display case that leg is settled; it is not added a second time to your bill.
This is where a great deal of published writing about "GST on gold making charges" goes wrong. It takes a genuine rate from the trade leg of the transaction and moves it onto the customer's invoice, where it does not belong. The number is real. The place it has been put is not.
One honest exception, and we will not pretend it is settled. Job work, as GST defines it, means work done on goods belonging to another registered person. A retail customer is not a registered person. So if you bring your own metal to a shop and ask for a piece to be made or reworked, you are not, strictly, in a job-work transaction at all, and the 5% is not automatically your rate either. What applies there depends on how the work is classified, and that turns on facts a web page cannot see. Ask the shop to write the charge and its basis on the estimate before any work starts.
What a correct tax invoice shows
A tax invoice is not a courtesy. Two separate sets of rules prescribe what has to be on it, and a jewellery bill that satisfies only one of them is half a document.
The GST invoice rules govern the commercial half: the shop's name, address and GSTIN; a consecutive serial number and the date of issue; a description of the piece and its HSN code; the taxable value, the rate of tax and the amount of tax, appearing as central tax and State tax on a purchase inside Tamil Nadu; and the total payable. Your own name and address, with the name of the State and its code, become compulsory once the taxable value of the supply reaches ₹50,000 — a threshold a jewellery purchase crosses easily, and one that applies even though you are not GST-registered yourself.
The hallmarking rules govern the metal half, and this is the part almost nobody is told about. On the sale of a hallmarked article the bill must carry a separate description of each article, the net weight of precious metal, the purity in both carat and fineness, and the hallmarking charge. It must also state that you can have that purity independently verified at any BIS-recognised assaying and hallmarking centre. That line is required — of jeweller-to-jeweller sales as well as retail ones — and its absence tells you something about the bill you are holding.
Two figures are named by neither set of rules: the gold rate applied on the day, and the making charges or value addition. A shop confident in its price has no reason to withhold the two numbers the price is built from.
The tax itself arrives as two lines rather than one, which is where most buyers stop reading. That is exactly where to start.
Do this once, on your next purchase
Take the taxable value on the bill, multiply by 0.03, and compare it against the central tax and State tax lines added together. If the answer does not match, you are owed an explanation before you pay — not after.
None of this is an awkward thing to ask for. We print the breakup on every bill and walk through it before payment; that is not a favour, it is what the document is for.
Why two bills for the same piece look different
Take the worked example from our making-charges guide: a 20-gram 22K necklace at an illustrative gold rate of ₹13,255 per gram, with 12% value addition. Here is the same piece billed the two ways buyers actually encounter.
| Line item | Billed as one supply | Billed as a 3% + 5% split |
|---|---|---|
| Gold value — 20 g × ₹13,255 | ₹2,65,100 | ₹2,65,100 |
| Value addition @ 12% | ₹31,812 | ₹31,812 |
| Taxable value | ₹2,96,912 | ₹2,96,912 |
| Tax on gold value | — | ₹7,953 |
| Tax on making charges | — | ₹1,591 |
| GST @ 3% on the whole | ₹8,907 | — |
| Total payable | ₹3,05,819 | ₹3,06,456 |
The gap is ₹637, and it is not arbitrary. Splitting the bill moves the making-charge slice from 3% to 5% — two extra percentage points applied to ₹31,812. Whatever the size of the piece, the difference between the two methods is always 2% of the making charges. On a light chain that is small change. On a full bridal set it is not.
Now the part that costs us something to say: the tax line is rarely where two bills actually diverge. It is simply the line people know how to argue about. On the same piece, moving value addition from 12% to 11% saves ₹2,651 before tax — several times the entire tax difference above. If you are comparing quotes, the value addition percentage and the day's gold rate will decide the outcome long before the tax treatment does.
Three other reasons two bills separate, none of them tax:
- The base rate for the day. Each shop sets its own. Ours is published — 22K gold is per gram and 24K is per gram in Vellore (). Rates are indicative and confirmed at the time of billing at the showroom, and you can check today's gold rate in Vellore before you set out.
- Whether a quote is tax-inclusive. A counter figure quoted before tax and one quoted after tax differ by 3%, which is enough to make a cheaper shop look dearer.
- Where the hallmarking charge sits. The hallmarking rules require the charge to be indicated on the bill for a hallmarked article. Some shops give it its own line; others quote a value addition they say already covers it. Ask which, because the two can be identical money on very different-looking bills.
Coins follow a different arithmetic again, because there is no making charge in the ornament sense. On our coins a minting markup of is added to the metal value, and the then applies to that subtotal. We set this out in full in the guide to buying gold coins.
Exchanging old gold
Old-gold exchange raises two separate tax questions, and they have very different answers.
The gold you hand over
You are not charged GST on old jewellery you sell or exchange. Selling your own ornaments is not carrying on a business, so the transaction is not a supply at all — and the shop does not have to account for tax on it under the reverse-charge route either. The board issued a press release specifically to clarify this, correcting an answer it had given at a public session the same day which suggested the opposite. That correction has stood ever since, which tells you how easily this one is got wrong even by people who should know.
What the shop may deduct is a commercial matter, not a tax one: melting loss, or a purity adjustment after testing. That should be a stated figure, arrived at by testing the metal in front of you, and agreed before the exchange is settled. Our guide to what 916 and BIS hallmarking actually mean covers how old and unhallmarked pieces are assessed.
The new piece you buy
Here we are going to be straight with you rather than tidy. Practice differs, and we could not find a single primary clarification that settles it for every case. Some shops charge 3% on the full value of the new ornament and treat your old gold purely as a form of payment. Others compute the tax after setting off the value of the metal you brought in. Those produce different totals, and we will not invent a rule to resolve it.
What you can do is insist that the bill shows which basis was used, with the old gold's assessed weight, purity and value written on it. A shop that can explain its method can put it on paper.
What we can confirm, and what we cannot
Tax pages age badly, so it is worth saying where this one stops.
The slabs changed in 2025, and gold was left alone. The restructuring that took effect on 22 September 2025 collapsed the old slabs into a standard rate of 18% and a merit rate of 5%, with a de-merit band held back for a short list of goods. Gold and silver sit in none of those. Nothing in the Council's published lists of rate changes touched jewellery, and the job-work entries that did move down to 5% — umbrellas, printing, bricks, pharmaceuticals, hides and leather — do not include jewellery, which was already there.
Two questions we have not resolved, and have said so where each arises: the correct treatment when a customer supplies their own metal, and the valuation basis for an old-gold exchange against a new purchase. On both we have described the mechanism and told you what to ask, rather than printing a number we cannot stand behind.
And plainly: we are jewellers, not tax practitioners, and nothing on this page is tax advice. The only figures that bind anyone are the ones printed on the invoice at the counter on the day. If a large purchase genuinely turns on the tax treatment, have your own accountant read the invoice — and talk to us beforehand so there are no surprises at billing.
Questions we are asked
Is GST applicable on gold making charges?
Yes, but not as a rate of its own. When you buy a finished ornament, the making charges form part of the taxable value of the piece and the whole amount is taxed at 3% along with the gold. A correctly drawn retail invoice for a finished ornament does not carry a separate making-charges tax line at a higher rate.
My bill shows 3% on gold and 5% on making charges. Is that wrong?
Ask the shop what the second line is for. If they made the piece and sold it to you as a finished ornament, the board's published trade guidance treats that as one supply taxed at 3% on the total. If the transaction is genuinely something else, such as work done on metal you supplied yourself, a different treatment may apply and the shop should be able to say which and why.
Do I pay GST when I sell or exchange my old gold?
No. Selling your own old jewellery is not a business activity, so it is not a taxable supply and you are not charged GST on the gold you hand over. GST still applies in the normal way to whatever new piece you buy.
Is GST charged on the hallmarking charge as well?
Yes. Where a hallmarking charge is billed on an ornament, it forms part of the value of that ornament and is included in the taxable value before the 3% is calculated. It is not taxed separately at a different rate.
Send us a bill and we will read it with you
Photograph any jewellery bill — from anywhere — and send it over. We will tell you what each line is, whether the tax adds up, and what to ask about. No obligation, and we will not ask you to buy anything.