Gold Prices In India Big News: Will GST Rates On Gold, Jewellery, Coins, Biscuits & Bars Fall Before Diwali?

Gold rates in India have continued to be volatile for the past ten days, and a new ray of hope has emerged in the form of GST revamps. Prime Minister Narendra Modi has signalled the upcoming reforms in GST during the 79th Independence Day celebration. Gems and jewellery companies are hoping for a revision in GST rates on gold, silver, coins, jewellery, biscuits and bars. Even a mild cut in GST rates on gold is expected to be a key positive.

GST Rates On Gold:

Currently, the government charges 3% GST on both 24-carat and 22-carat gold.

For instance, if you bought 24-carat gold worth Rs 1,50,000, then this purchase will attract up to Rs 4,500 GST.

The rate is the same for gold forms, including jewellery, coins, and bars.

Apart from this, there is a 5% GST imposed on making charges on gold, which is incurred by the customer.

Here's an example as per the Razorpay website: If you provide 10 grams of gold worth Rs. 50,000 and the making charges are Rs. 10,000, you will pay:

- GST on gold: Rs. 1,500 (3% of Rs. 50,000)
- GST on making charges: Rs. 500 (5% of Rs. 10,000)
- Total GST: Rs. 2,000

GST On Digital Gold:

Here as well, 3% GST is applied on gold purchases online.

There are several gold schemes available online for investments. These are --- Gold ETFs, Sovereign Gold Bonds, and Gold Mutual Funds.

As per ClearTax, these gold funds are generally not subject to GST on the gold itself. However, GST applies to service charges, management fees, or other charges associated with these schemes. Therefore, investors must ensure that any service fees are accounted for, as they may attract 18% GST.

Should Govt Cut GST Rates On Gold Before Diwali?

On August 15, Prime Minister Narendra Modi underscored the importance of the next generation of reforms under GST, which brings relief to the common man, farmers, middle class and MSMEs.

He added, "To build an 'Atmanirbhar Bharat', the Central Government is proposing significant reforms in GST. It will be focused on 3 pillars, namely

-structural reforms
- rate rationalisation, and
-ease of living

The Central Government has sent its proposal on GST rate rationalisation and reforms to the Group of Ministers (GoM) constituted by the GST Council to examine this issue.

According to Fortune India report, Mira Gulati, founder and principal designer, Mirari said, This (the rates) has been the practice since GST first came in. Over time, people have come to accept GST as part of their purchases, but jewellery is never a small buy; it's often for weddings, milestones, or as an investment. That's why even a small change in tax feels important. It can make customers feel more at ease with their decision and make the overall experience of buying jewellery more satisfying."

GST revamp is expected to take place before Diwali festival, to give a big boost to consumer demand.

This will be a big reform on tax rates on gold after the customs duty revision in FY25 Union Budget.

In Union Budget 2024, Finance Minister Nirmala Sitharaman reduced custom duty on golds to 6% from earlier 15% and that on gold dore the duty was cut to 5.35% and 14.35%. This was a major relief since gold import duties had been above 10% mark for over 11 years prior to 2024.

Gold Rates In India:

After 100 grams and 10 grams fell by Rs 21,300 and Rs 2,130 in 24 carat last week compared to their peaks, gold rates in India are unchanged on August 18.

At present, 10 grams gold price is at Rs 1,01,180 in 24 carat, and at Rs 92,750 in 22 carat. While 100 grams gold rates are at Rs 10,11,800 in 24 carat, and at Rs 9,27,500 in 22 carat.

As per Rahul Kalantri, VP Commodities, Mehta Equities, gold and silver stayed close to two-week lows as demand for safe heavens eased amid signs of cooling geopolitical tensions. Although last week's Trump-Putin talks failed to secure a ceasefire, Putin signaled openness to granting security guarantees for Ukraine through the US and Europe. Later today, Trump is scheduled to meet President Zelenskiy and European leaders to advance peace discussions. Investors now turn their attention to the Fed's meeting minutes on Wednesday and Chair Jerome Powell's speech at Jackson Hole for cues on the interest rate outlook.