GST for Jewellery Business 2026 – Rates, Registration & ITC Guide for Gold, Silver & Diamond Retailers
Latest GST 2.0 rates on gold, silver, platinum, and diamond jewellery. Complete guide to GST registration, margin scheme for old gold, ITC on making charges, TCS applicability, and compliance for jewellers in India.
Quick Summary – GST for Jewellery Business
- GST Rate on Gold/Silver/Platinum Jewellery: 3% (unchanged under GST 2.0).
- GST Rate on Making Charges: 5% (standard rate for jewellery workmanship).
- GST Rate on Diamonds & Precious Stones: 0.25% for rough, cut, and polished diamonds.
- Registration Threshold: ₹40 lakh for normal states; ₹20 lakh for special category states.
- Margin Scheme for Old Gold: GST @3% payable only on the dealer's profit margin under Rule 32(5).
- Income Tax TCS: 1% TCS on sale of jewellery exceeding ₹2 lakh (Section 206C(1D)).
Takeaway: Jewellers must correctly apply 3% GST on new jewellery, 5% on making charges, and use the margin scheme for second-hand gold to minimise tax outflow.
1. Introduction – GST Compliance for Jewellers in India
India is one of the world's largest gold and jewellery markets. For jewellery retailers, manufacturers, and wholesalers, Goods and Services Tax (GST) compliance is a critical business function that directly impacts pricing, margins, and customer trust.
With the rollout of GST 2.0 (effective 22 September 2025), the government retained the 3% GST rate on gold, silver, and platinum jewellery to curb smuggling and maintain price stability. However, making charges now attract a standard 5% GST.
This comprehensive guide covers GST rates on jewellery, HSN classifications, registration, Input Tax Credit (ITC), margin schemes for old gold, Income Tax TCS on high-value sales, and common compliance pitfalls.
Takeaway: Understanding the difference between GST on the metal (3%) and GST on making charges (5%) is essential for accurate billing.
2. GST 2.0 Rates on Gold, Silver, Diamond & Jewellery in 2026
Under the simplified GST 2.0 framework, the tax rates for the bullion and jewellery sector are clearly defined to avoid ambiguity.
| Product / Service | HSN / SAC Code | GST Rate |
|---|---|---|
| Gold Jewellery (Plain & Studded) | 7113 | 3% |
| Silver Jewellery | 7113 | 3% |
| Platinum Jewellery | 7113 | 3% |
| Gold Coins & Bullion | 7114 / 7108 | 3% |
| Making / Wastage Charges | 9988 | 5% |
| Rough Diamonds | 7102 | 0.25% |
| Cut & Polished Diamonds | 7102 | 0.25% |
| Precious Stones (Gemstones) | 7103 | 0.25% |
| Old / Used Jewellery (Margin Scheme) | 7113 | 3% on Profit Margin |
Takeaway: Always bifurcate the value of the precious metal and the making charges on the invoice to apply the correct GST rates.
3. HSN Code Classification for Jewellery & Ornaments
Using the correct HSN (Harmonised System of Nomenclature) code ensures proper tax filing and ITC reconciliation.
| HSN Code | Description | GST Rate |
|---|---|---|
| 7108 | Gold (including gold plated with platinum) unwrought or in semi-manufactured forms | 3% |
| 7106 | Silver (including silver plated with gold or platinum) | 3% |
| 7110 | Platinum, palladium, rhodium, etc. | 3% |
| 7102 | Diamonds, whether or not worked | 0.25% |
| 7113 | Articles of jewellery and parts thereof (of precious metal or of metal clad with precious metal) | 3% |
| 7114 | Articles of goldsmiths' or silversmiths' wares (including coins) | 3% |
Takeaway: Ensure your billing software maps HSN 7113 for jewellery and 7108 for coins/bullion.
4. GST Registration for Jewellery Business – Eligibility & Threshold
Under Section 22 of the CGST Act, 2017, GST registration is mandatory for jewellers if the aggregate turnover exceeds the prescribed limit.
| Business Type | Normal States | Special Category States |
|---|---|---|
| Jewellery Retailers / Wholesalers (Goods) | ₹40 lakh | ₹20 lakh |
| Repair / Customisation Services | ₹20 lakh | ₹10 lakh |
Voluntary Registration: Even if your turnover is below the threshold, voluntary registration is highly recommended. It allows you to claim ITC on making charges, packaging, rent, and advertising, significantly reducing your tax burden.
Mandatory Registration Cases for Jewellers
Takeaway: Most medium and large jewellery showrooms will cross the ₹40 lakh threshold and must register. Register earlier to start claiming ITC on input services.
5. Step-by-Step GST Registration Process for Jewellers
Takeaway: Keep your shop address proof and bank account details ready before starting the application.
6. Documents Required for GST Registration for Jewellery Shop
- PAN Card of the business / proprietor / partners / directors.
- Aadhaar Card of all promoters / partners / directors.
- Proof of business address (rent agreement, electricity bill, or municipal property tax receipt).
- Bank account details (cancelled cheque or bank statement).
- Shops & Establishments Registration / Partnership Deed / Incorporation Certificate.
- Photographs of the applicant / partners / directors.
- Digital Signature Certificate (DSC) – mandatory for companies and LLPs.
- Details of additional places of business (if multiple showrooms).
Takeaway: If you operate multiple jewellery outlets, list all of them to claim ITC on stock located in each branch.
7. Input Tax Credit (ITC) for Jewellery Retailers & Manufacturers
ITC allows jewellers to reduce their tax liability by claiming credit for the GST paid on business inputs. This is a major cost-saving mechanism.
| Particulars | Amount |
|---|---|
| GST paid on Making Charges (Input Service) | ₹10,000 |
| GST paid on Packaging & Advertising | ₹5,000 |
| GST paid on Shop Rent & Electricity | ₹8,000 |
| Total ITC Available | ₹23,000 |
| GST collected on Sales @3% | ₹50,000 |
| Net GST Payable | ₹27,000 |
Eligible ITC Items for Jewellers
Conditions for Claiming ITC – Section 16(2)
- Valid Tax Invoice: Must contain GSTIN, HSN, tax amounts, and supplier details.
- Receipt of Goods/Services: Claim only after actual receipt of service or goods.
- Tax Paid to Government: The supplier must have deposited the tax.
- Return Filing: ITC must be claimed in GSTR‑3B by the 20th of the following month.
Note: Under the new Invoice Management System (IMS) effective April 2026, jewellers must verify all supplier invoices in GSTR‑2B before claiming ITC to avoid reversals.
Takeaway: Always procure GST-compliant invoices for making charges and packaging to maximize your ITC benefit.
8. Margin Scheme for Old Gold, Silver & Pre‑owned Jewellery
Jewellers frequently deal in old or second-hand gold. Under Rule 32(5) of the CGST Rules, GST is payable only on the dealer's profit margin, not on the full selling price, provided the jewellery is purchased from an unregistered person.
How the Margin Scheme Works
Takeaway: Maintain detailed records of old gold purchases with customer PAN/Aadhaar details to substantiate the margin scheme during audit.
9. GST on Making Charges for Custom Jewellery
Making charges (also known as wastage charges or labour charges) are a significant component of the jewellery bill. Under GST 2.0, making charges consistently attract 5% GST.
It is mandatory to show the metal value and making charges separately on the tax invoice. Bundling them together and applying a flat 3% GST is incorrect and can lead to notices.
Gold Rate: ₹45,000 (10 grams)
Making Charges: ₹3,000
GST Calculation:
- 3% on ₹45,000 = ₹1,350
- 5% on ₹3,000 = ₹150
Total Invoice Amount: ₹48,000 + ₹1,500 = ₹49,500
Takeaway: Always bifurcate metal value and making charges in the invoice to apply the correct 3% and 5% GST rates respectively.
10. Composition Scheme for Small Jewellery Shops
Small jewellery retailers with turnover up to ₹1.5 crore can opt for the composition scheme and pay a flat 1% GST (0.5% CGST + 0.5% SGST).
| Category | Turnover Limit | GST Rate |
|---|---|---|
| Jewellery Retailers / Traders | Up to ₹1.5 crore | 1% |
| Repair / Customisation Services | Up to ₹50 lakh | 6% |
Restrictions under Composition Scheme
- ❌ Cannot claim ITC – you pay tax on turnover but cannot claim credit for GST paid on inputs.
- ❌ Cannot make inter‑state sales – sales must be restricted to the same state.
- ❌ Cannot supply to government departments or large corporate buyers requiring GSTIN.
Takeaway: The composition scheme is best for small, single-location goldsmith shops that do not claim ITC and do not sell to large B2B buyers.
11. Reverse Charge Mechanism (RCM) for Jewellers
Under Reverse Charge, the jewellery business pays GST instead of the supplier. Common RCM scenarios include:
Takeaway: Track all GTA and legal service invoices to ensure RCM compliance and claim available ITC.
12. GST Returns Filing for Jewellery Business
| Return | Description | Due Date |
|---|---|---|
| GSTR‑1 | Outward supplies (sales) – invoice-wise for B2B | 11th of following month |
| GSTR‑3B | Summary return with ITC and tax payment | 20th of following month |
| GSTR‑9 | Annual return | 31 December |
| GSTR‑9C | Audit report (turnover > ₹5 crore) | 31 December |
| GSTR‑4 | Annual return for composition dealers | 30 June |
QRMP Scheme: Jewellers with turnover up to ₹5 crore can opt for the Quarterly Return Monthly Payment (QRMP) scheme.
Takeaway: File returns on time to avoid late fees and interest. Reconcile GSTR‑1 with books monthly.
13. E‑Way Bill Compliance for Jewellers
Takeaway: Generate e-way bills for all high-value bullion and jewellery dispatches to avoid detention and penalties.
14. Income Tax TCS on Jewellery Sales – Section 206C(1D)
Under Section 206C(1D) of the Income Tax Act, every seller of bullion or jewellery is required to collect Tax Collected at Source (TCS) on the sale of jewellery exceeding ₹2 lakh.
- TCS Rate: 1% of the sale consideration exceeding ₹2 lakh.
- Applicability: Applicable to both cash and non-cash transactions.
- Compliance: TCS must be deposited with the government via challan, and Form 27EQ must be filed quarterly.
Takeaway: Jewellers must integrate TCS compliance into their billing software for all sales exceeding ₹2 lakh.
15. Common GST Mistakes by Jewellery Businesses & Solutions
✅ Solution: Apply 3% on metal value and 5% on making charges separately.
✅ Solution: Pay 3% GST only on the profit margin (SP – CP) for used jewellery.
✅ Solution: Configure billing software to automatically calculate and collect 1% TCS.
✅ Solution: No ITC available on purchases from unregistered dealers. Ensure suppliers are registered.
✅ Solution: Use HSN 7113 for jewellery and 7108 for bullion/coins.
✅ Solution: Claim all eligible ITC by 30 November of the following financial year.
Takeaway: Regular reconciliation and proper invoice bifurcation are the keys to error-free compliance.
16. Penalties & Risks for Non‑Compliant Jewellers
Takeaway: Stay updated with GST rates and ensure correct bifurcation to avoid costly penalties.
17. Industry‑Specific GST Insights for Jewellers
Apply 3% GST on metal and 5% on making charges. Claim ITC on packaging and shop rent.
Diamonds attract 0.25% GST. Ensure correct HSN code (7102) for billing.
Claim ITC on raw gold (3%) and job work services (5%). File ITC-04 for job work.
Must register under GST. TCS of 1% is collected by the platform; claim ITC on sales.
Generate e-invoices for B2B sales. Ensure HSN 7108 for gold bars and coins.
Repair services attract 18% GST (SAC 9988). ITC available on spare parts and tools.
Takeaway: Tailor your GST strategy based on whether you sell new, old, or provide manufacturing services.