GST on gold jewellery in India: how the 3% and 5% actually work

Almost every dispute we see on a jewellery invoice comes down to one thing: the bill shows a single total, and nobody can reconstruct how it was reached. The tax is not complicated. Presenting it badly is what causes the trouble.

The two rates

On a sale of gold jewellery, two different things are being sold and they are taxed differently. The metal itself attracts 3% GST. The making charge — the labour of turning that metal into an ornament — attracts 5%. They are separate lines on the same invoice, not one blended rate.

Whether the tax splits into CGST and SGST or becomes IGST depends on the buyer's state, not on what is being sold. Same state, it splits in half; different state, it is one IGST line. The first two digits of the buyer's GSTIN tell you which.

Where it goes wrong

• Taxing everything at 3% because the metal dominates the bill. The making charge is a supply of service and carries 5%.
• Rounding each line to the rupee and then adding up. Round once, at the end, or the invoice will not tie out against the books.
• Treating an old-gold exchange as a discount. It is a separate purchase from the customer, and it reduces what is payable — it does not reduce the taxable value of the new piece.
• Forgetting that a B2B sale above the threshold needs an e-invoice with an IRN before it is a valid document.

Old gold in the same bill

When a customer brings old ornaments in exchange, value them on their own terms — gross weight, an assessed purity, a deduction for stones and solder — and show that valuation on the invoice. The new piece is taxed in full. The old gold then comes off the amount payable. Doing it the other way round understates your output tax and is the single most common finding in a jewellery GST review.

What to insist on from your software

1. 01Every line shows its own computation: weight, rate, making rule, and the tax on each part.
2. 02One rounding, at the end of the bill, recorded as a round-off line.
3. 03The place of supply derived from the buyer's GSTIN, not typed by the cashier.
4. 04E-invoice registration that happens after the sale is saved, so the counter never waits for a government portal.

Jevrat does all four by default. A bill you cannot explain to an officer, line by line, is a bill that will cost you eventually.