Why Gold Is Taxed At 3% GST Under GST 2.0 When Slabs Are 5% And 18%

Under GST 2.0, announced in early September 2025, the Council simplified slabs to 5% and 18% and introduced a 40% band for sin and luxury goods, yet kept physical gold and silver at 3% GST on value and 5% on jewellery making charges to preserve continuity and sensitivity in bullion taxation.

Special Category For Precious Metals

Gold and silver have historically been treated as sensitive commodities, so the GST Council retained a dedicated 3% rate on the metal to balance revenue with the risk of illicit trade spikes that could follow a higher rate. The unchanged levy offers clarity ahead of the festive and wedding season, a period when bullion demand is culturally significant in India.

How Jewellery Is Taxed

A jewellery purchase is effectively split into 2 parts: 3% GST on the metal value and 5% GST on making charges, reflecting the labour service separately without pushing the entire item into a higher bracket. Official FAQs and sectoral guidance consistently note 5% on job work or making charges alongside 3% on the underlying gold or silver.

Read More: Gold, Silver Retain 3% GST as Council Freezes Tax Rates Ahead of Festive Season!

Why Not Move Gold To 5%

Despite broader slab rationalisation, the Council left bullion rates unchanged due to high demand sensitivity, industry representations, and the need to deter smuggling, which could rise if the rate increased materially. Media and explainer notes confirm gold bars, coins, and jewellery continue at 3% on value with 5% on making charges under the new framework.

Gold As a Store Of Value

Gold’s role as a store of value and household asset places it outside typical consumption logic, supporting the continued special treatment under GST 2.0. This approach maintains price predictability for buyers while aligning with long-standing policy settings since the original GST rollout for bullion.

Conclusion

Even with GST 2.0’s 5% and 18% structure plus a 40% band for sin luxury goods, bullion remains at 3% on metal value and 5% on making charges to balance cultural importance, demand sensitivity, and enforcement concerns. This deliberate continuity preserves stability for households and the trade during peak seasonal buying windows.

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