GST on Gold

A large portion of the gold bought and sold in India is imported from foreign countries. It attracts a customs duty of 12.5%. This includes a basic customs duty of 10.5% + 2.5% AIDC (agriculture infrastructure and development cess)*. Further, Social Welfare Cess and GST may also be applicable at the time of import. Above regulations are frequently updated by government from time to time. . However, during pre GST era it was at around 10%. As on today, if gold worth Rs. 50,000 is imported to India, customs duty of Rs. 6250 is payable on the transaction.

*Disclaimer: The rate of customs duty is as per current tax rules in May 2023, and subject to periodic change.

GST on gold purchase in India attracts 3% GST (1.5% CGST + 1.5% SGST) rate on the value of gold. So, if the value of gold being purchased is Rs. 10,000 the total GST payable on the transaction will be Rs. 300. This 3% GST rate on gold is applicable to not only gold jewellery purchases but also to the purchases of gold coins or bars.

The current 3% GST on gold replaces the earlier 1% VAT (Value Added Tax) and 1% service tax that was applicable to gold transactions in the pre-GST era. As per some experts, the higher charges applied through GST on Gold has been introduced to deter gold imports into the country.

The below table gives a snapshot of the different GST on gold rates and other taxes on Gold currently applicable in India:

Currently gold investments in India made into digital or paper gold incurs a GST rate of 3% on the amount invested. So, if a digital gold investment of Rs. 5000 is made, 3% GST will be deducted and the remaining Rs. 4850 will actually be invested. This is a one-time charge applicable at the time of investment. GST is currently not applicable to Gold Exchange Traded Funds (ETFs) or Gold Mutual Fund purchases in India.
However, this is not the only charge applicable to digital gold investment in India. Other charges that may be applicable and vary from one investment platform to another include transaction costs, trustee fees, maintenance charges, storage charges, processing fees, etc. These charges are typically covered by the spread i.e. difference between the buying and selling price of digital gold on the platform.
If you know what GSTIN is but can't wrap your head around the registration process online, feel free to visit the Seva Kendra.