Introduction
Understanding GST on gold silver diamond jewellery is vital for businesses and consumers in India navigating the Goods and Services Tax (GST) regime, effective since July 1, 2017. These precious jewellery items, integral to cultural and investment purposes, attract specific GST rates under the Companies Act, 2013, impacting pricing and compliance during company registration or purchases in cities like Patna or Bangalore. This blog provides a comprehensive guide on GST on gold silver diamond jewellery in 2025, detailing rates, HSN codes, making charges, and compliance requirements, and highlights how TaxQue simplifies GST processes for businesses.
What Is GST on Gold Silver Diamond Jewellery?
GST on gold silver diamond jewellery refers to the tax levied under India’s GST framework on the supply of jewellery made from gold, silver, or diamonds. GST, a destination-based tax, replaces multiple indirect taxes (e.g., VAT, excise duty) with unified rates, administered by the GST Council. The rates are standardized at 3% for the jewellery’s total value, with an additional 5% on making charges, affecting final prices and input tax credit (ITC) eligibility for businesses. These items are classified under Harmonized System of Nomenclature (HSN) codes, ensuring uniform taxation across India, crucial for compliance during business operations.
GST Rates and HSN Codes for Gold, Silver, Diamond Jewellery
Below is a detailed breakdown of GST on gold silver diamond jewellery with current rates and HSN codes for 2025:
| Jewellery Type | GST Rate | HSN Code | Details |
|---|---|---|---|
| Gold Jewellery | 3% (total value) + 5% (making charges) | 7113 | Applies to 18K, 22K, 24K gold jewellery, including ornaments, coins, bars. Intra-state: 1.5% CGST + 1.5% SGST; Inter-state: 3% IGST. |
| Silver Jewellery | 3% (total value) + 5% (making charges) | 7113 | Applies to silver articles and jewellery. Same tax structure as gold. |
| Diamond Jewellery | 3% (total value) + 5% (making charges) | 7113 | Applies to diamond-studded jewellery; cut/polished diamonds alone at 1.5% (HSN 7102). |
- Gold Jewellery: A 3% GST applies to the total value (gold + making charges), treated as a composite supply. Making charges attract 5% GST separately if shown on the invoice. For a ₹1,00,000 gold necklace with ₹10,000 making charges, GST is ₹3,000 (3% of ₹1,00,000) + ₹500 (5% of ₹10,000) = ₹3,500.
- Silver Jewellery: Identical to gold, 3% GST on total value and 5% on making charges. A ₹20,000 silver bracelet with ₹2,000 making charges incurs ₹600 + ₹100 = ₹700 GST.
- Diamond Jewellery: 3% GST on the finished product, including diamonds and making charges. Cut/polished diamonds alone (not jewellery) are taxed at 1.5% since July 18, 2022 (47th GST Council). A ₹50,000 diamond ring with ₹5,000 making charges incurs ₹1,500 + ₹250 = ₹1,750 GST.
- Note: Rates are current as of June 3, 2025. The Union Budget 2024 reduced customs duty on gold/silver to 6%, lowering overall costs, but GST rates remain unchanged. Industry calls for a 1% GST reduction are pending.
Compliance and Input Tax Credit (ITC)
GST on gold silver diamond jewellery compliance involves:
- GST Registration: Mandatory for jewellers with turnover above ₹20 lakh (services) or ₹40 lakh (goods) during company registration in Patna, Bangalore, or elsewhere. GSTIN includes state codes (e.g., 10 for Bihar, 29 for Karnataka).
- Invoicing: Invoices must include GSTIN, HSN code (7113 for jewellery), and GST breakdown (3% on total value, 5% on making charges). Intra-state sales split GST into CGST + SGST; inter-state use IGST.
- ITC Eligibility: Businesses can claim ITC on jewellery purchases or making charges if used for resale or manufacturing, with valid invoices. For example, a jeweller in Hyderabad can claim ₹3,500 ITC on a ₹1,10,000 gold necklace purchase. ITC is unavailable for personal use.
- Returns Filing: File GSTR-1 (sales) and GSTR-3B (summary) monthly/quarterly, ensuring correct HSN codes and state codes.
- E-Way Bills: Not required for jewellery transport under CGST Rule 138(14), except in Kerala for intra-state movement.
- Reverse Charge Mechanism (RCM): If an unregistered goldsmith provides making services, the registered jeweller pays 5% GST on making charges under RCM, claiming ITC later.
Impact on Businesses and Consumers
The GST on gold silver diamond jewellery has reshaped India’s jewellery market:
- Transparency: Uniform 3% GST (5% on making charges) replaces varied pre-GST taxes (1–2% VAT, 1% service tax), ensuring clear billing for consumers in Patna or Bangalore.
- Price Increase: Post-GST, jewellery costs rose marginally (e.g., ~2% higher than pre-GST due to 5% on making charges). A ₹50,000 silver necklace now incurs ₹1,650 GST versus ~₹1,000 pre-GST.
- Business Benefits: ITC reduces costs for jewellers; simplified compliance via the GST portal enhances efficiency.
- Consumer Impact: Higher costs reduce demand, but transparency aids price comparison. Exchanging old jewellery for new incurs no GST on the old gold/silver, only on new jewellery value.
- Industry Growth: Despite initial concerns, the formal sector grew, with exports boosted by 2018 GST exemptions for registered exporters. The sector aims for $145 billion by FY28.
TaxQue simplifies GST on gold silver diamond jewellery compliance with expert support for GST registration, invoicing, and return filing. Visit TaxQue’s GST compliance guide or company registration services for seamless solutions.
FAQs
1. What is the GST rate on gold jewellery in India?
Gold jewellery attracts 3% GST on total value and 5% on making charges under HSN 7113.
2. Is the GST rate the same for silver and diamond jewellery?
Yes, both silver and diamond jewellery are taxed at 3% on total value and 5% on making charges under HSN 7113.
3. Can jewellers claim ITC on jewellery purchases?
Yes, registered jewellers can claim ITC on gold, silver, or diamond jewellery used for business, with valid invoices.
4. Is GST applicable when exchanging old jewellery?
No GST is charged on old jewellery; only the new jewellery’s value incurs 3% GST plus 5% on making charges.
5. How does TaxQue assist with GST on gold silver diamond jewellery?
TaxQue provides tools for GSTIN verification, invoice compliance, and return filing. Explore TaxQue’s compliance services.
Conclusion
The GST on gold silver diamond jewellery in India, set at 3% on total value and 5% on making charges, standardizes taxation while increasing transparency and compliance. From Patna to Bangalore, businesses and consumers benefit from a unified market, though higher costs pose challenges. Platforms like TaxQue streamline GST on gold silver diamond jewellery compliance with expert tools for GST registration and return filing. Stay informed, comply seamlessly, and navigate India’s jewellery market confidently in 2025.
