GST on Gold in India: How Jewellery and Gold Investments Are Taxed 

In India, gold is not just an investment option; it is tied to our culture and traditions. From buying jewellery on Akshaya Tritiya and Dhanteras to long-term holding, it remains a major part of household wealth. The World Gold Council reported India’s gold demand at 710.9 tonnes in 2025 and expects it to be around 600-700 tonnes in 2026.  

In this blog, we explain the GST applicable to physical gold, digital gold, ETFs, and SGBs in India in 2026.   

Why Does Gold Jewellery Usually Cost More than the Gold Rate? 

Many buyers look at the daily gold price and assume that it will be close to the final amount payable. In practice, jewellery costs are often higher because several components are added to the base metal value.

These may include:

• GST on the gold value
• GST on making charges
• Actual making charges charged by the jeweller
• Design or craftsmanship premium
• Wastage or other billing practices, depending on the seller

This is why jewellery is often more suitable for consumption and use, while other gold formats may be more efficient for pure investment exposure.

How is GST Applied to Different Types of Gold Purchases?

Physical and digital gold usually attract 3% GST on the value of gold, while paper and market-linked gold formats generally do not attract GST on the purchase value itself. 

The GST impact varies significantly depending on whether you are buying physical gold or investing through financial instruments.

Here is the GST applicable to various categories of gold:

Gold option	GST on purchase	Extra GST or tax-linked cost
Gold jewellery	3%	5% on making charges
Gold coins	3%	Extra fabrication and design cost
Gold bars	3%	Premium and Margin charges
Digital gold	3%	Platform T&C may vary
Gold ETF	No GST on units	Fund expenses may apply
Gold mutual fund	No GST on units	Expense ratio and fund charges may apply
Sovereign Gold Bond	No GST on bond value	Other investment considerations apply

1. GST on Gold Jewellery

When you buy gold jewellery, GST usually applies in two parts:

• 3% GST on the gold value
• 5% GST on making charges

This is one of the main reasons jewellery tends to cost more than the live gold rate.

Note: The GST rate does not differ based on the purity label 22/24 carat gold.

Final bill = Gold value + making charges + 3% GST on gold value + 5% GST on making charges. 

For example, suppose you buy gold jewellery with:

• Gold value: ₹1,00,000
• Making charges: ₹10,000

GST calculation:

• 3% GST on gold value = ₹3,000
• 5% GST on making charges = ₹500

Total purchase value = ₹1,13,500

GST on Second-Hand Jewellery

Second-hand jewellery is not tax-free. If a registered jeweller or dealer sells pre-owned jewellery, GST may still apply depending on how the transaction is structured and billed. 

Under the GST margin scheme for second-hand goods, dealers may pay tax on the margin rather than the full transaction value.

GST on Custom-Made Jewellery 

Custom-made jewellery generally follows the same tax structure as regular jewellery purchases. The gold value is usually subject to 3% GST, while the making or design charges are typically taxed separately as a service component. 

Is GST Applicable to Jewellery Repairs? 

Jewellery repair differs from buying a new ornament because it is a service, not a purchase of gold. Thus, repair bills may include GST on the repair or service charge, depending on how the jeweller raises the invoice. 

What Is the HSN Code for Jewellery? 

Under HSN Chapter 71, the HSN code for jewellery is 7113. It is important for billing and classification purposes under the GST framework for accurate taxation and compliance.

2. GST on Gold Coins and Bars

The purchase typically attracts 3% GST on the value of gold. Since coins and bars usually do not include jewellery-style making charges, the billing structure is often easier to understand than ornament purchases.

3. GST on Digital Gold

Digital gold also generally attracts 3% GST at the time of purchase. This often surprises first-time buyers because digital gold feels like a pure online investment product, but it is still linked to underlying physical gold and is not treated like an ETF or mutual fund unit for GST purposes.

4. Do Gold ETFs, Gold Mutual Funds and SGBs Attract GST?

Not every gold investment is taxed like physical gold. While physical gold and digital gold generally attract GST at the time of purchase, paper and market-linked gold options are treated differently. 

• Gold ETFs

Gold ETFs are not subject to GST because investors buy exchange-traded fund units. 

However, the total cost can still depend on platform-level charges such as brokerage or account-related fees. 

• Gold Mutual Funds

Gold mutual funds do not attract GST on the investment amount itself at the time of purchase. 

Capital gains tax may also apply depending on the holding period and the tax rules in force at the time of redemption. 

• Sovereign Gold Bonds

Sovereign Gold Bonds are generally not subject to GST on the purchase value because they are government-backed paper gold instruments. 

However, if bought or sold through the secondary market, transaction-related charges such as brokerage fees may apply. 

If you want to invest in ETFs, mutual funds, or bonds without adding extra platform costs, open a demat account with Shoonya and keep your investment costs lower. 

What Changed in Gold Taxation after Budget 2026? 

Budget 2026 introduced targeted changes to the taxation of SGBs from 1 April 2026. 

Key changes in gold taxation after the budget 2026-

• Sovereign Gold Bonds (SGBs): The tax exemption on redemption at maturity is now limited to original subscribers who hold the bond from the issue date to maturity.
• Secondary Market SGBs: Investors who buy SGBs on the stock exchange will no longer receive the same tax-free maturity benefit as original subscribers. Capital gains tax may apply on redemption, depending on the holding period and applicable rules.
• No Change in GST: The GST structure for gold remains unchanged. Physical gold continues to attract a 3% GST on its value, while jewellery-making charges remain taxed separately.
• Physical and Digital Gold: No fresh tax revision was announced in the Budget 2026. These assets continue to be subject to the existing capital gains rules, with long-term gains taxed at 12.5% without indexation after the applicable holding period. 
• Gold ETFs and Gold Mutual Funds: Listed financial assets continue to be treated as long-term after more than one year, while the broader long-term capital gains rate structure introduced earlier continues to apply. 

Conclusion 

GST on gold in India depends on the type of gold you buy. So, if the purpose is jewellery or gifting, the tax is part of the purchase cost. But if the purpose is investment exposure, comparing gold options by entry cost, structure, and liquidity can lead to a more informed decision.

GST on Gold: FAQs

Source: https://www.ibja.co/

Disclaimer: This content is for education and awareness purposes only and should not be considered investment advice or a recommendation. Investments in securities markets are subject to market risks. Read all the related documents carefully before investing.