GST on Gold Jewellery in India — The 3% + 5% Split, Explained

If you sell jewellery in India, GST isn't one rate — it's two rates on the same invoice line. This catches every new jeweller out at least once. Here's how it actually works.

Why is GST split into two rates?

The CBIC treats finished jewellery as goods (the metal) plus services (the labour and craftsmanship that turned raw gold into a ring). They get taxed differently:

• 3% GST on metal value — under HSN 7113 (articles of jewellery of precious metal). This applies to the gold/silver/platinum content valued at the per-gram rate.
• 5% GST on making charges + wastage — under SAC 9988 (services related to manufacturing on physical inputs owned by others). This applies to your labour component.

Both must be billed separately on the same invoice. Your software should compute and print them as two distinct tax lines.

The math — a worked example

Customer buys a 22K gold chain. Net weight 16.080 g. Today's 22K rate is ₹5,496/g. You charge ₹450/g making charge and 6% wastage. Customer is from Karnataka; you're also in Karnataka.

Because the customer is in the same state as your shop, the ₹3,278 tax is split equally — ₹1,639 CGST and ₹1,639 SGST. If the customer had been from Tamil Nadu, the same ₹3,278 would go to a single IGST line.

CGST vs SGST vs IGST

The place-of-supply rule decides which:

• Same state as your branch (intra-state) → CGST + SGST, 50/50 split of the total tax.
• Different state (inter-state) → single IGST line at the full rate.

For walk-in customers without a GSTIN, the place of supply defaults to your branch's state (so CGST + SGST). For customers with a GSTIN, the place of supply is taken from their registered address.

Old-gold exchange treatment

If a customer brings in old gold worth ₹40,000 and buys a piece for ₹1,04,191, the bill goes down — but GST treatment depends on how you record the exchange.

Mode 1: Treat old gold as payment (recommended for B2C)

The new piece is sold for ₹1,04,191 with full GST. Then ₹40,000 of old-gold value is recorded as a non-cash payment. Customer pays the remaining ₹64,191. You bill full GST and the customer's effective price reflects the exchange.

Mode 2: Reduce subtotal (only when contractually agreed)

The new piece's subtotal is reduced pro-rata by ₹40,000, and GST is recalculated on the lower base. This reduces your output GST but is harder to defend if a GST officer asks why you charged less tax than the printed price. Most CAs recommend Mode 1.

Aurex ERP supports both modes — you pick once on the invoice and the math is automatic.

Repairs & job work

Pure labour repairs (polishing, resizing without added metal) are SAC 9988 → 5% GST on the entire bill.

Repairs where you add metal or stones → split the bill: 3% on the added metal value, 5% on labour + any added making charge.

What must appear on a jewellery GST invoice

Under Rule 46 of CGST Rules, a tax invoice must show:

• Invoice number, date, place of supply.
• Your name, address, GSTIN.
• Customer name, address, and GSTIN (if B2B) or PAN (for B2C above ₹2 lakh).
• HSN/SAC codes — 7113 for jewellery, 9988 for making charges.
• Description, quantity, unit (grams for metal).
• Taxable value, GST rate, tax amount — separately for each rate.
• Total tax (CGST/SGST/IGST broken out).
• Total invoice value (figures and words).
• Signature or digital signature.

For pieces hallmarked under BIS, the 6-character HUID should be printed on the invoice line — see our BIS HUID guide for why this matters.

FAQs

Is GST charged on the day's gold rate or the rate at the time of order?

Rate at the time the invoice is finalised. If you took an advance booking last month at ₹6,200/g and you're billing today at ₹5,496/g, the invoice and GST are based on ₹5,496. The advance just becomes a credit toward the final bill.

Does the customer's name need to be on every invoice?

Yes for any invoice. Their PAN is mandatory for invoices > ₹2 lakh under PMLA. GSTIN is required for the place-of-supply rule if they're a registered business.

What HSN code do I use for diamond jewellery?

Same as gold — 7113 for jewellery of precious metal. The diamonds themselves can also be billed separately as 7102 (diamonds) at 0.25% on a value basis if your CA prefers, but most jewellers include the stone value under the 7113 line at 3%.

What about silver?

Same 3% on metal value, 5% on making. HSN 7113 covers silver jewellery too.

Do I need to issue e-invoices?

Only if your aggregate turnover is over ₹5 crore in any past financial year. Most retail jewellers are below this — you can stick to regular tax invoices until your turnover crosses the threshold.

This article is general guidance and not professional tax advice. GST rates and rules can change; always cross-check with a practising CA before relying on calculations for filings. Last updated May 2026.