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Recent Articles Of GST
Impact of GST on Jewellery Business
GST has a substantial impact on the jewellery business in India. Under GST, the taxation on jewellery is primarily governed by the GST rates and the determination of the taxable value.
GST Rates on Jewellery and Making Charges:
In instances where an individual is involved in the trading or manufacturing of jewellery with gold or silver being the primary component, a GST rate of 3% will apply to the jewellery itself. Additionally, the registered person will be required to pay 5% GST on the making charges.
GST Registration Requirement:
The GST registration threshold limits that are generally applicable to regular taxpayers also apply to such businesses. Furthermore, businesses in this category have the option to choose the composition scheme as provided in section 10 of the CGST Act
GST on Job work charges & its applicability on ITC:
In this type of business, it's common for jewellers to transform gold bars into jewellery with the assistance of a goldsmith. This activity is known as job work and is classified under the category of supply of service. The goldsmith will charge for their services known as making charges on which GST at 5% is applicable.
The GST paid by registered jewellers on making charges can be claimed as an Input Tax Credit.
GST Rates with HSN Code for Jewellery
| S. No. | Particulars | HSN/SAC Code | GST Rate |
| 1 | Rough and un-worked diamonds, precious and semi-precious stones | 7102, 7103, 7104 | 0.25% |
| 2 | Pearls, Gold, Silver, Articles of jewellery of gold, silver, etc | 7106, 7108, 7113, 7118 | 3% |
| 3 | Job work in relation to cut and polished Diamonds, plain or studded jewellery of gold, silver, etc | 9988 | 5% |
| 4 | Gold (Including Gold Plated With Platinum) Unwrought Or In Semi-Manufactured Forms, Or In Powder Form - Non-Monetary | 7108 | 3% |
| 5 | Gold (Including Gold Plated With Platinum) Unwrought Or In Semi-Manufactured Forms, Or In Powder Form - Non-Monetary : Powder | 71081100 | 3% |
| 6 | Gold (Including Gold Plated With Platinum) Unwrought Or In Semi-Manufactured Forms, Or In Powder Form - Non-Monetary : Other Unwrought Forms | 71081200 | 3% |
| 7 | Gold (Including Gold Plated With Platinum) Unwrought Or In Semi-Manufactured Forms, Or In Powder Form - Non-Monetary : Other Semi-Manufactured Forms | 71081300 | 3% |
| 8 | Gold (Including Gold Plated With Platinum) Unwrought Or In Semi-Manufactured Forms, Or In Powder Form Monetary | 71082000
|
3% |
| 9 | (1) Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set (2) Ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport (includes synthetic or reconstructed stones, apart from unworked or simply sawn or roughly shaped) |
7103, 7104 | 0.25% |
| 10 | Services by way of job work in relation to diamonds falling under chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); | 9988 | 1.5% |
| 11 | Rough diamonds or simply sawn diamonds, industrial or non-industrial | 7102 | 0.25% |
| 12 | Pearls, natural or cultured, whether or not worked or graded but not strung, mounted or set; pearls, natural or cultured, temporarily strung for convenience of transport | 7101 | 3% |
| 13 | Base metals, silver or gold, clad with platinum, not further worked than semi-manufactured | 7111 | 3% |
Taxable Value:
The taxable value for jewellery under GST is determined by the transaction value, which encompasses the cost of the jewellery, making charges, and any additional expenses such as transportation, insurance, etc., associated with the sale.
FAQ’s
Q-1: What will be the GST on Gold and Gold Jewellery?
Ans- The GST rate on gold jewellery is 3%. However, registered jewellers have to pay 5% on making charges for making jewellery
Q-2: Is “Karigar” required to take the GST number?
Ans- Yes, if his income from making his jewellery exceeds Rs.20 Lacs per annum then he must obtain a GST number.
Q-3: My man takes 20kg of Goods to different states in which he brings back some goods and he sells some goods, how SGT will be levied?Ans- GST will be levied on all goods which are sold, but he cannot take goods to other states where you don’t have an office and where you have not applied for a casual taxable number in that state.
Q-4: Sometimes, one “karigar” directly sends goods to another “Karigar” in that case is it necessary to prepare vouchers etc.?
Ans- Yes, otherwise goods can be confiscated.
Q-5: How will the GST be applied on repairing jewellery?
Ans- GST will be applied on repairing charges only. However, if some gold is added while repairing goods, GST @3% is to be paid on additional gold used for repairing. 18% GST will be applied on repairing.
Q-6: A customer wants to exchange a coin/bullion into ornaments. How will GST be applied?
Ans- Provisions of reverse charge will not be applicable on old Gold purchases. As per a Press release dated 13.07.2017 even though the sale of old Gold by an individual is for consideration, it cannot be said to be in the course or furtherance of his business (as selling old Gold jewellery is not the business of the said individual), and hence does not qualify to be a supply per se. Accordingly, the sale of Old jewellery by an individual to a jewelers will not attract the provisions of section 9(4) and jeweler will not be liable to pay tax under the reverse charge mechanism on such purchases. However, if an unregistered supplier of gold ornaments sells it to the registered supplier, the tax under RCM will apply.
Q-7: How will GST apply if a unregistered customer wants to convert a chain to a mangalsutra?
Ans- Since a customer is unregistered & original product is getting converted to different product, GST will be levied only on making charges.
Q-8: Is it necessary to write making charges separately while raising invoices to the customers?
Ans- If the international standards are to be adopted, making charges and wastage must be written separately while raising invoices to the customer. However, the government has stated that jewellery will be taxed at 3% and hence there is no need to write making charges separately.
Q-9: Is it necessary to prepare vouchers etc. while issuing goods to “Karigar”?
Ans- Yes, otherwise goods can be confiscated.
