GST on Jewellery in India

Working out the GST on jewellery

A jewellery bill has two taxable parts that are charged at different rates, so the final GST is not a single flat percentage of the total.

• The jewellery value attracts 3% GST.
• The making charges attract 5% GST, billed separately.
• For intra-state sales each rate splits into equal CGST and SGST halves. Inter-state sales use a single IGST at the same rate.

A worked example

Take a jewellery purchase where the base value is ₹1,00,000 and the making charges are ₹15,000. Here is how the bill builds up.

Jewellery rates by material

Everything in Chapter 71 sits at 3%, which is a special rate outside the ordinary 5, 18 and 40 percent structure. The Council kept it there through GST 2.0 to hold the tax incidence close to the pre-GST level of roughly 2%. What changes between categories is the classification and the valuation rules, not the headline rate.

Two ways making charges get billed

This is where invoices differ and where buyers get confused. On a custom or job-work order, where you bring gold or commission a piece, the invoice should show two lines: 3% on the metal value and 5% on the making charges. On ready-made retail jewellery, the sale is generally treated as a composite supply where the jewellery is the principal supply, and 3% applies to the total including making charges. Ask which basis your jeweller is using, because on a piece with heavy making charges the difference is real money. What is not acceptable is a single consolidated amount with no breakup at all: the invoice should show metal value, making charges, HSN codes and the tax on each.

Imitation jewellery is 3% too

Costume and fashion jewellery under HSN 7117 attracts the same 3%, whether it is base metal, glass, plastic, thread or German silver, and regardless of price. Items plated with precious metal but not solid precious metal stay under 7117. The classification test is the base material: predominantly precious metal goes to 7113, predominantly non-precious to 7117. Misclassifying between the two is one of the most common errors in the trade, and while the rate happens to match, the valuation rules and compliance obligations do not.

The mixed supply trap

Here is a genuine catch for jewellers running promotions. Sell diamond jewellery bundled with an expensive watch as a single promotional package and the sale can become a mixed supply, taxed at the highest rate of any item in it. That means 18%, the watch's rate, applied to the entire package rather than 3%. Diamond jewellery on its own is a composite supply at 3%, because the stones are the principal supply and the setting is incidental. The fix is to invoice separable items separately rather than as one bundled SKU.

Old jewellery, exchanges and ITC

An individual selling personal jewellery to a jeweller charges no GST, because they are not a registered supplier. When you exchange old jewellery for new, GST applies to the value addition, meaning the new gold added plus making charges, not on the old gold returned. A registered dealer reselling second-hand jewellery may use the margin scheme under Rule 32(5), charging GST only on the profit margin. Registered jewellers can claim ITC on raw gold and inputs used for taxable supplies, but ITC is blocked under Section 17(5)(h) on jewellery or coins given away as promotional gifts.

Compliance notes for jewellers

HSN accuracy matters here more than in most categories, since 7108, 7113, 7117 and 7118 all carry 3% but describe very different goods, and mismatches trigger scrutiny. E-invoicing applies above the prescribed turnover threshold, and B2C invoices above ₹25,000 need a dynamic QR code. Chapter 71 goods have special e-way bill treatment: the general exemption for precious metals does not extend to imitation jewellery under 7117, and Rule 138F allows a state to mandate e-way bills for intra-state movement of gold and precious stones above a notified threshold, so check your state's position before moving high-value stock.

Frequently asked questions