What are the GST rules of selling Gold Bars as a Gold Trader in India?

What Are the GST Rules for Selling Gold Bars as a Gold Trader in India?

The sale and purchase of gold in India is a highly regulated and taxed sector, and with the advent of the Goods and Services Tax (GST), the framework for taxation has become more standardized. Gold traders, especially those dealing in gold bars, must navigate a specific set of rules under GST to remain compliant and competitive. This article outlines the key GST rules and regulations for selling gold bars in India.

1. GST Rate on Gold Bars

Under the current GST regime:

  • Gold (including gold bars) attracts a 3% GST on the value of the gold.

  • If any making or manufacturing charges are involved (e.g., refining, minting), these are charged separately at 5% GST if applicable under a job work contract.

This distinction is crucial when gold bars are manufactured or refined from raw gold or scrap gold.

2. Input Tax Credit (ITC) Eligibility

Gold traders can claim Input Tax Credit on:

  • GST paid on procurement of gold, gold bars, or bullion.

  • GST paid on job work or manufacturing services (like refining).

  • GST paid on other inputs and input services used in the course of business, such as rent, utilities, packaging, etc.

However:

  • If the gold trader sells gold bars to consumers, and not registered businesses, the trader may have limited utilization of ITC, especially if there are no further taxable sales.

  • If the trader opts for the composition scheme, ITC cannot be claimed.

3. Place of Supply and GST Implications

Under GST, the place of supply determines whether a transaction is intra-state or inter-state:

  • Intra-state sale: CGST + SGST @ 1.5% each (total 3%).

  • Inter-state sale: IGST @ 3%.

This rule applies even for online or cross-border sales within India.

4. GST Registration Requirements

Any gold trader must register for GST if:

  • Their aggregate turnover exceeds ₹40 lakhs (₹20 lakhs for special category states).

  • They deal in inter-state supply, regardless of turnover.

  • They sell through e-commerce platforms.

Given the high value of gold, most traders will cross the threshold and must register under GST.

5. Job Work and Gold Refining

If a gold trader sends raw gold or scrap for refining into gold bars:

  • The refiner (job worker) may charge 5% GST on the job work services.

  • The trader can claim ITC on this service.

  • There must be proper documentation: Job work challan, delivery notes, and returns.

If the job worker also supplies the gold (not just services), the 3% GST on gold value applies instead.

6. Reverse Charge Mechanism (RCM)

RCM is not typically applicable on the sale or purchase of gold bars unless:

  • Gold is procured from an unregistered person. Then, the buyer (registered trader) must pay GST under RCM.

  • Services such as transportation or legal services are availed from unregistered vendors.

Traders must be vigilant in tracking these cases to remain compliant.

7. Imports and Exports of Gold Bars

Imports:

  • Import of gold bars attracts Basic Customs Duty (BCD) + IGST @ 3%.

  • BCD is not creditable under GST; however, IGST is available as ITC.

Exports:

  • Exports of gold bars are treated as zero-rated supplies under GST.

  • Traders can:

    • Export without payment of IGST under Letter of Undertaking (LUT) and claim ITC refund.

    • Or export with payment of IGST and claim refund of IGST paid.

8. Billing and Invoicing Requirements

Gold traders must issue a tax invoice with the following details:

  • GSTIN of buyer (if registered)

  • Description of goods (Gold Bars)

  • HSN Code: 7108

  • Quantity and value

  • Rate and amount of GST

  • Place of supply (if inter-state)

Proper invoicing is crucial for ITC claims and GST compliance.

9. E-Way Bill Requirements

As per current rules:

  • E-Way Bill is mandatory if the value of goods (gold bars) transported exceeds ₹50,000.

  • However, some states have exempted gold from E-Way bill requirement (e.g., Maharashtra, Kerala).

  • Check with state-specific notifications for compliance.

10. Gold Jewelry vs. Gold Bars – GST Difference

  • Gold bars: 3% GST (pure commodity).

  • Gold jewelry: 3% GST on gold + 5% GST on making charges (if charged separately).

  • For traders exclusively in gold bars, the tax treatment is simpler than for jewellers.

Conclusion

Gold traders in India dealing with gold bars must comply with a structured GST regime:

  • Charge and collect 3% GST on sales.

  • Maintain proper documentation for input tax credit.

  • Stay alert to job work rules, RCM, and inter-state supply provisions.

  • Understand import/export rules to claim eligible credits and refunds.

Given the high value and regulatory scrutiny in the gold market, maintaining GST compliance is not just a legal requirement but also essential for maintaining credibility and operational efficiency.


Comments

Post a Comment

Popular posts from this blog

Give comparison of all the charges of top 10 Payment Gateways in India

  Comparison of Charges of Top 10 Payment Gateways in India (2025) As the digital payment landscape continues to grow in India, selecting the right payment gateway is essential for businesses aiming to streamline online transactions. While functionality, integration, and customer support are important, charges and fees often remain the deciding factor. This article offers an in-depth comparison of charges associated with the top 10 payment gateways in India to help merchants make an informed choice. 🧾 Key Payment Gateway Charges Explained Before diving into the comparison, let’s understand the common fee structures: Charge Type Description Setup Fee One-time fee charged during account creation. Annual Maintenance Fee Yearly charge for using the service. Transaction Discount Rate (TDR) Fee deducted per transaction, usually a percentage of the transaction amount. Payout/Withdrawal Fee Charges for transferring money from the gateway to the bank account. 📊 Top 10 Payment Gatew...
Read more

How to calculate the Gold price using Gold Commex rate, INR rate and Custom Duty?

  How to Calculate the Gold Price Using Gold COMEX Rate, INR Exchange Rate, and Custom Duty Gold has always been a vital investment asset and a symbol of wealth, especially in countries like India. But have you ever wondered how the price of gold is actually calculated in India when it's based on international markets? Understanding this process can give investors, traders, and even retail buyers valuable insight into how prices are derived and why they fluctuate. In this article, we’ll break down how to calculate the gold price in India using three primary components: Gold COMEX Rate (International price) INR-USD Exchange Rate Custom Duty and Taxes Let’s dive into the step-by-step process and the logic behind each component. 1. Understanding the Gold COMEX Rate COMEX (Commodity Exchange) is a division of the Chicago Mercantile Exchange (CME) and is one of the leading global commodity markets where gold is traded. The COMEX price is quoted in: US Dollars per ...
Read more

What are the detailed steps to start a Digital Gold Business?

What are the Detailed Steps to Start a Digital Gold Business? In the evolving landscape of fintech and digital assets, digital gold has emerged as a popular investment tool. It allows customers to buy, sell, and store gold digitally without physically owning it. Starting a digital gold business is a lucrative venture, but it requires strategic planning, regulatory compliance, and strong technological infrastructure. Here’s a step-by-step guide to help you understand how to start a digital gold business: Step 1: Understand the Digital Gold Business Model Before diving in, gain a solid understanding of the digital gold ecosystem. In this model: Customers buy and sell gold in small or large quantities online. The gold is backed by physical gold stored securely by trusted vaulting partners. You act as a platform that facilitates these transactions and may earn via spreads, commissions, or service fees. There are typically three key players in this model: Customer – t...
Read more