New Delhi: The GST Council is expected to hold its 56th meeting in the first week of September, with speculation over possible tax cuts and consumer benefits. Prime Minister Narendra Modi has indicated a major overhaul of GST norms focusing on structural reforms, rate rationalisation, and ease of living.
For the gems and jewellery sector, a 0.5 percent–1 percent GST cut on gold bars, coins, biscuits, and jewellery is being anticipated.
Possible Impact of GST Cut on Gold
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A reduction in GST rates on gold could boost consumer demand and lower gold prices. This development is considered timely ahead of the festive and wedding season, especially Diwali.
Current GST on Gold
The GST rate on gold is currently 3 percent (1.5 percent CGST + 1.5 percent SGST), applicable to jewellery, coins, and bars. This replaced the earlier 1% VAT and 1% service tax when GST was introduced in July 2016.
Example: On a gold purchase of Rs 1,00,000 → GST = Rs 3,000 (3 percent).
GST on Making Charges and Other Services
Gold jewellery making charges attract a 5 percent GST rate, while custom-made jewellery carries both 3 percent on gold value and 5 percent on making charges.
Example:
Gold worth Rs 1,00,000 → GST = Rs 3,000
Making charges of Rs 15,000 → GST = Rs 750
There is also a 5 percent GST on jewellery repair services. A one percentage point reduction in GST would make jewellery purchases more affordable for consumers, though it may create revenue challenges for the government.
Effect of a 1 percent GST Cut
If the GST on gold is reduced from 3 percent to 2 percent, a Rs 1,00,000 purchase would attract Rs 2,000 GST instead of Rs 3,000 — a direct saving of Rs 1,000.
Gold Price Trends in August 2025
Despite recent corrections, gold prices have risen 2 percent in August 2025. On August 8, 24-carat gold touched an all-time high of Rs 1,03,310 per 10 grams before easing. Global factors such as a weaker US dollar, expectations of a US Fed rate cut, inflation concerns, and tariff developments have influenced the price movement. Overall, gold has delivered a strong 28 percent return in dollar terms year-to-date.
Jewellery Market Outlook Ahead of Festivals
With the festive and wedding season approaching, the jewellery market is showing signs of revival in demand. The India International Jewellery Show (IIJS) recorded stronger-than-expected buying interest and a pickup in orders from both large chain stores and independent retailers.
Retailers who had been cautious earlier are restocking actively in anticipation of improved festive sales. Stable gold prices are also encouraging buyers. Manufacturers are focusing on lighter-weight jewellery to attract price-sensitive customers, while investment demand for gold bars and coins remains robust.
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