Understanding gold rates in India

Gold prices in India move with the international spot price of gold, the rupee–dollar exchange rate, and import duties. Because gold is priced globally in US dollars, a weaker rupee usually pushes domestic gold rates higher even when the international price is flat. Demand around festivals and the wedding season, along with central bank buying worldwide, also influences the rate you see at the counter.

The two purities most buyers deal with are 24 carat and 22 carat. 24 carat gold is 99.9% pure — also called 999 fine gold — and is used for coins and bars bought as investment. 22 carat gold is 91.6% pure, widely known as "916 gold," and is alloyed with metals such as copper, silver and zinc to make it hard enough for jewellery. Pure 24 carat gold is too soft to hold intricate designs, which is why ornaments are almost always 22 carat or lower.

How jewellers calculate the final price

The sticker price of a gold ornament is not just the metal value. A typical bill is built from four parts:

• Metal value — the day's gold rate for the purity, multiplied by net weight.
• Making charges — the jeweller's labour, charged either as a percentage (commonly 8–25%) or a flat per-gram amount. Intricate, hand-made designs cost more; machine-made and plain pieces cost less.
• GST — 3% on the gold value and 5% on the making charges.
• Hallmarking charge — a small per-piece certification fee, usually around ₹35–₹50.

For investment, coins and bars carry minimal making charges, so more of your money goes into actual metal. For the same reason, plain jewellery retains more resale value than heavily designed pieces, where making charges are effectively a sunk cost you don't recover on sale.

GST on gold in India

A uniform 3% GST applies to the value of gold across all purities and formats — 22K and 24K jewellery, coins and bars alike. Making charges are taxed separately at 5%. These rates have been stable since GST was introduced in 2017 and were not revised in the 2025 or 2026 budgets. When you exchange old gold for new jewellery, GST is charged only on the additional gold and the making charges, not on the value of the old gold you trade in.

Sovereign Gold Bonds (SGBs) and gold ETFs are treated as securities, so no GST applies when you buy them — a meaningful advantage over physical gold for pure investment.

Hallmarking and the HUID code

BIS hallmarking is mandatory for gold jewellery in India. Every hallmarked piece carries a 6-character HUID (Hallmark Unique Identification) code, and jewellers are not permitted to sell non-hallmarked gold jewellery. Before buying, check for three things stamped on the piece: the BIS logo, the purity grade (for example, 22K916 for 22 carat), and the HUID. Hallmarking is your guarantee of purity — never accept a "discount" in exchange for skipping it, because unhallmarked gold is hard to resell at a fair price.

Tax when you sell gold

Selling gold at a profit attracts capital gains tax. For physical gold, gold coins and digital gold sold on or after 23 July 2024:

• Held 24 months or more — long-term capital gains, taxed at a flat 12.5% (plus cess), without indexation.
• Held under 24 months — short-term capital gains, added to your income and taxed at your slab rate.

Gold ETFs, being listed, reach long-term status sooner — after 12 months. Sovereign Gold Bonds held to their 8-year maturity and redeemed through the RBI window are exempt from capital gains tax altogether, though the annual interest remains taxable at your slab. This is general information, not tax advice; confirm your specific situation with a qualified chartered accountant.

Physical gold versus paper gold

Physical gold — coins, bars and jewellery — gives you something tangible but comes with making charges, storage and security concerns, and 3% GST at purchase. Paper gold options sidestep most of these:

• Gold ETFs trade on the exchange, can be bought in small quantities, and have no making charge or storage hassle.
• Sovereign Gold Bonds pay a small annual interest on top of price appreciation and are tax-free if held to maturity.
• Gold mutual funds let you invest through SIPs without a demat account.

A common approach is to hold jewellery for use and occasions, and ETFs or SGBs for the investment portion of your gold allocation.

Tips before you buy

• Check today's rate for the correct purity before visiting the shop, so you can verify the rate applied on your bill.
• Always ask for an itemised invoice showing metal value, making charges and GST separately.
• Compare making charges across jewellers — they vary widely and are negotiable.
• For investment, prefer coins, bars, ETFs or SGBs over heavy jewellery.
• Keep every invoice; you'll need it for resale, exchange, insurance and tax.