GST on Gold and Silver After GST 2.0: Effective Sept 2025

GST on gold and silver after GST 2.0 (Sept 2025): rates unchanged at 3% on metal or on total value (including making charges). Rules, examples, tips for buyers & investors.

Gold and silver are inseparable from Indian culture and personal finance. Whether it’s wedding jewellery, festive coins, or bullion bars, one cost you must factor in is GST on gold and silver. After the much-talked-about GST 2.0 reforms announced on 3 September 2025, many expected big changes in precious metal taxes. Several portals even speculated about a flat 4% structure.

Here is the fact, the GST Council kept rates unchanged. As of September 2025, GST on gold and silver remains 3% on the total value. There is no flat 4% rate notified.

Effective status: No rate change for gold/silver was approved in the 56th GST Council meeting (3 Sept 2025). The existing structure continues to apply.

Regarding the taxation on Gold, refer to our earlier article “Gold Tax in India 2025: How Much Are You Really Paying?“.

GST on Gold and Silver After GST 2.0: Effective Sept 2025

Snapshot: Current GST on Gold and Silver (Sept 2025)

Product / Format	GST rate	Notes
Gold jewellery (rings, chains, bangles, ornaments)	3% on gold value + on making charges	Unchanged
Silver jewellery & silver articles (utensils, idols, artefacts)	3% on silver value + on making charges	Unchanged
Gold bars & coins	3%	On total value
Silver bars & coins	3%	On total value
Digital gold / digital silver	3%	Purchase via apps/wallets/platforms
Gold ETFs / Silver ETFs / Gold Mutual Funds	Exempt	No GST on purchase
Sovereign Gold Bonds (SGBs)	Exempt	No GST; SGBs also pay interest & redemption indexed to gold price
Old jewellery exchange	GST on value addition only	Relief continues

HSN references (Chapter 71): 7108 (Gold), 7106 (Silver), 7113 (Jewellery) – rate schedule remains as before for GST purposes.

What GST 2.0 Actually Changed — and What It Didn’t

GST 2.0 (3 Sept 2025) focused on compliance simplification (e-invoicing, reconciliations, ITC clarity, refunds). It did not change GST on gold and silver rates.

• What changed? Process improvements across filing, ITC matching, audit thresholds, and refund speed (benefits especially for MSMEs & exporters).
• What stayed the same for precious metals? Rates on gold, silver, platinum unchanged; the long-standing 3% (metal) + (making) structure continues.

How GST on Gold and Silver Is Calculated (with Examples)

Below are simple, real-world scenarios to understand how GST on gold and silver bills are computed.

1) Gold jewellery purchase

• Gold value (net of wastage): Rs.1,00,000
• Making charges: Rs.10,000

GST calculation

• 3% on Rs.1,10,000 = Rs.3,300
• Total GST = Rs.3,300

Final invoice = Rs.1,00,000 + Rs.10,000 +Rs.3,300 = Rs.1,13,300 (other charges like hallmarking/packaging may apply separately, if any).

2) Silver article (utensil/idol) purchase

• Silver value: Rs.50,000
• Making charges: Rs.5,000

GST calculation

• 3% on Rs.55,000 = Rs.1,650
• Total GST = Rs.1,650

Final invoice = Rs.55,000 + Rs.1,650 = Rs.56,650.

3) Exchange old gold for new jewellery

• Value given for old jewellery: Rs.80,000
• Price of new jewellery (metal): Rs.1,10,000
• Making charges on new piece: Rs.10,000

Taxable value addition = New jewellery value (Rs.1,10,000) – old gold value (Rs.80,000) = Rs.30,000

GST calculation

• 3% on Rs.40,000 = Rs.1,200
• Total GST = Rs.1,200

Why not tax the full amount? To avoid double taxation, GST is charged on value addition when old gold is exchanged.

4) Gold or silver coins/bars (bullion)

• Bullion price: Rs.2,00,000

GST = 3% of Rs.2,00,000 = Rs.6,000 (no making charge component for standard bullion).

5) Digital gold / digital silver

• Purchase value: Rs.25,000

GST = 3% of Rs.25,000 = Rs.750

Note: Besides 3% GST, platform spreads/storage margins may apply; read platform disclosures.

Investor Angle: Which Formats Minimise GST?

If your objective is investment (not wearing the metal), the aim should be to minimise transaction costs, GST leakage and other frictions. Below is a practical comparison of the main investment routes — including Gold ETFs and Gold Mutual Funds — and how GST affects each.

Gold ETFs vs Gold Mutual Funds

Gold ETFs

• What they are: Exchange-traded funds that hold physical gold (or gold derivatives) and trade on the stock exchange like any other security.
• Liquidity & access: Traded on the exchange; can be bought/sold intra-day via your broker or demat account.
• Cost structure: Expense ratio (annual fund management cost) + brokerage when you buy/sell.
• GST treatment: Units of ETFs (being securities) are not subject to GST on the purchase/sale itself. However, ancillary costs — notably brokerage — attract GST, and the expense ratio/management fees charged by the Asset Management Company (AMC) are subject to GST (the GST on AMC/management services is borne by the scheme and reflected in NAV/expense ratio).

Gold Mutual Funds (active or fund-of-funds investing in gold ETFs)

• What they are: Open-ended mutual fund schemes that provide exposure to gold (either by holding gold-linked securities or by investing in gold ETFs).
• Liquidity & access: Sold/redeemed via fund houses or brokers; settlement timelines differ from ETF intraday trading.
• Cost structure: Typically higher expense ratios than ETFs (for actively managed funds), entry/exit loads if any, and platform charges.
• GST treatment: Purchase/redemption of mutual fund units (securities) is not subject to GST. But the AMC’s management fees and services that form part of the expense ratio attract GST — again, this is embedded in the scheme’s costs and reduces investor returns.

GST — practical points to remember

• Units of ETFs and mutual funds are treated as securities — there is no GST on the transaction value of units. This makes ETFs and mutual funds advantageous from a GST perspective compared with physical gold.
• Management fees / expense ratio attract GST (charged on the AMC’s service), and this is reflected in the fund’s expense ratio or NAV; it effectively reduces returns for investors.
• Brokerage on ETF trades attracts GST (as it is a service). So while the ETF units themselves are GST-free, the transaction costs are not.
• Sovereign Gold Bonds (SGBs) remain GST-exempt on purchase and avoid these expense/GST leaks — but they have different characteristics (interest, maturity terms) and are best for longer-term investors.

Practical differences for an investor

• Low-cost, liquid exposure: Gold ETFs usually win due to lower expense ratios and exchange liquidity (good for active trading or short-term exposure).
• Systematic SIP-style investing: Some investors prefer gold mutual funds or ETF SIPs via platforms; choose lower-cost options to minimise GST-driven expense leakage.
• Long-term buy-and-hold: SGBs are attractive (no GST and interest component), provided you’re comfortable with the lock-in/maturity and tax rules on redemption.

Bottom line (investment + GST)

• For pure investment exposure with minimal GST impact, Gold ETFs and SGBs are typically more efficient than physical gold or digital gold.
• Gold mutual funds avoid GST on unit transactions but have higher expense ratios (which include GST on AMC services) — so check expense ratios carefully.

Buyer Checklist to Avoid Overcharging to Avoid Overcharging

1. Demand a detailed GST invoice
   • Separate lines for metal value, making charges, and GST components (3%).
2. Insist on BIS hallmarked jewellery
   • GST doesn’t certify purity; hallmarking does. Check hallmark with HUID.
3. Clarify wastage and making rates upfront
   • Both influence total price and the 3% GST component.
4. Use old jewellery exchange judiciously
   • It lowers effective tax outgo as GST applies only on value addition.
5. Compare across jewellers
   • Making charges vary widely; even with same GST, your total bill can differ.
6. For investments, prefer SGBs/ETFs
   • They avoid GST and reduce friction costs.

Compliance Notes for Jewellers

• Correct HSN usage: Chapter 71 (e.g., 7113 for jewellery). Ensure invoices reflect product-specific HSN and rate split.
• Input Tax Credit (ITC): Avail ITC on eligible inputs/services as clarified under GST 2.0 compliance updates; maintain documentary trail.
• Stock & job work records: Keep tight records for in-house vs job-work manufacturing to substantiate making charge taxation.
• E-invoicing thresholds: Follow the latest e-invoicing applicability under GST 2.0 if turnover criteria are met.
• Old-gold exchange documentation: Preserve valuation memos to justify value-add basis for GST.

Frequently Asked Questions (FAQs)

Q1. Did GST 2.0 change GST on gold and silver to a flat 4%?
A. No. As of Sept 2025, the official position is unchanged: 3% on metal value and on making charges for jewellery.

Q2. What is the effective date of the current rates?
The current rates are continuing; the 56th Council meeting on 3 Sept 2025 did not change them. Treat them as effective as of Sept 2025 (status quo).

Q3. Are SGBs, Mutual Funds and ETFs subject to GST?
No. SGBs, Mutual Funds and ETFs do not attract GST on purchase.

Q4. Is digital gold taxed the same as physical gold?
Digital gold/digital silver purchases attract 3% GST on the transaction value (platform charges/spreads are extra).

Q5. How is GST applied when exchanging old jewellery?
GST is levied only on value addition (new metal value minus value of old gold accepted) plus on the new making charges at 3%

Q6. Are silver utensils and idols treated like jewellery?
Yes, silver articles typically follow the same structure: 3% on metal value and on making charges.

Bottom Line

• GST on Gold and Silver after GST 2.0 (effective as of Sept 2025):
  3% on metal value + on making charges (jewellery).
• No 4% flat rate has been notified.
• For investors, SGBs and ETFs remain GST-free and efficient; for buyers, insist on proper invoices and hallmarking.

Staying grounded in official sources helps you avoid costly mistakes at the billing counter — and keeps your financial decisions clean, compliant, and confident.