GST on Gold Jewellery in India 2026 — HSN Codes, Rates, and What Billing Software Gets Wrong

A jeweller in Surat bills ₹3.7 lakh for a necklace. He charges 3% GST on the total invoice value. His CA files GSTR-1. The buyer is a corporate gifting company registered in Delhi — B2B, interstate. Three mistakes in that one transaction...

One: Making charges should be taxed at 5%, not 3%.
Two: Interstate B2B means IGST, not CGST+SGST.
Three: The HSN code needs to be 71131120 at 8 digits because the jeweller's turnover is above ₹5 crore.

The invoice is wrong. The IRP will reject the IRN if the buyer tries to generate it. The buyer's GSTR-2B shows no ITC. The gifting company's CA raises a query. The jeweller's CA raises an amendment request. Three weeks of back-and-forth for one invoice that should have taken 40 seconds.

This is not exceptional. It is the default for Indian jewellery billing done without the right classification engine.

Here is how gold GST actually works — and what it means if you are building billing software for any jeweller.

The rate table that most people get half-right

Gold jewellery does not have one GST rate. It has at least two, sometimes three, on the same invoice — applied to different line items.

The one that trips up billing software most: Making charges. Every jewellery billing system that applies a flat 3% on the total invoice is wrong. Making charges are a service — job work — and they attract 5%. This is not new. It has been 5% since 2017. But most small jewellers still receive a single-rate invoice, and most billing software built for jewellers still defaults to 3% across the board.

The correct invoice structure — with real numbers

Scenario: Registered jeweller in Mumbai sells a 22K gold necklace to a B2B corporate buyer in Delhi. 20 grams. Gold rate ₹7,500/gram. Making charges ₹800/gram.

Supply type: Interstate B2B → IGST applies. No CGST/SGST.

Same transaction, buyer is in Mumbai (intrastate):

The tax amount is identical. The split is different. The invoice fields are different. Billing software that doesn't know the supply type before generating the invoice will put the wrong columns on the document every time.

Old gold exchange — where Rule 32(5) applies

When a customer brings in old jewellery and exchanges it for new, the GST treatment is specific and frequently mishandled.

The rule: GST applies only on the value addition — the net gold the jeweller adds plus the making charges. Not on the full value of the new jewellery.

Why: The customer selling old gold is not making a business supply. They are disposing of a personal asset. No GST is charged on the old gold handed over.

The margin scheme — Rule 32(5) of CGST Rules: When a registered jeweller buys old gold from an individual and resells it without melting or refashioning, GST applies only on the profit margin. If the jeweller buys for ₹1,08,000 and sells for ₹1,12,000, GST is 3% of ₹4,000 = ₹120. If the jeweller melts and refashions it, standard 3% applies on the full resale value.

What billing software must handle: Three distinct old gold scenarios with different tax bases. Most jewellery billing apps support one — the simple exchange — and get the other two wrong.

E-invoicing for jewellers — what changed and what's mandatory now

From April 2025, e-invoicing is mandatory for all businesses with aggregate annual turnover above ₹5 crore. This includes jewellers.

What this means practically: Every B2B invoice must be submitted to the IRP (Invoice Registration Portal) before the transaction is confirmed. The IRP validates the JSON payload and returns an IRN (Invoice Reference Number) and QR code. The physical or digital invoice must carry both.

The IRP validates HSN codes at submission. If you submit HSN 7113 when you need 71131120 (turnover above ₹5 crore requires 8 digits), the IRP may accept it — but GSTR-1 filing with mismatched digit-depth creates reconciliation issues. The safer practice: always use 8-digit HSN in the IRP payload.

Fields the IRP checks for jewellery invoices:

• sellerGstin and buyerGstin — validated against live GST database
• itemList[].hsnCd — must be valid for Chapter 71
• itemList[].gstRt — must match the declared HSN (3% for 7113, 5% for 9988)
• totInvVal — sum of all line items including tax

A rejected IRN means the invoice is not a valid tax document. The buyer cannot claim ITC. If goods have already moved, you have a supply without a valid invoice — a Section 122 risk.

What this means if you are building jewellery billing software

This is where every tutorial on gold GST ends and where this one continues.

A jewellery billing application in 2026 needs to handle the following classification decisions for every invoice:

• Decision 1: Is the product gold jewellery (7113), raw gold (7108), a coin (7118), or imitation jewellery (7117)? Different HSN, different rate, different IRP validation.
• Decision 2: Is the transaction intrastate or interstate? Determines CGST+SGST vs IGST. Requires buyer and seller state codes.
• Decision 3: Is there a making charges component? Must be a separate line item at 5%, not collapsed into the gold rate.
• Decision 4: Is this an old gold exchange? If yes, what is the tax base — full value, net addition, or margin scheme?
• Decision 5: Is the seller's turnover above ₹5 crore? If yes, 8-digit HSN codes and IRP submission are mandatory.

Each of these decisions requires data that a hardcoded rate table cannot provide. The gold rate is stable at 3%, but the classification, the supply type, the digit depth, and the line item structure change with every transaction.

Here is how to resolve the HSN classification and rates programmatically using the GST Accelerator API:

from gstaccelerator import GSTAccelerator

gst = GSTAccelerator(api_key="your_api_key")

# Direct HSN lookup — gold jewellery (plain, 8-digit)
jewellery = gst.hsn.get("71131120")
print(jewellery["tax_rates"])
# {"igst": 3, "cgst": 1.5, "sgst": 1.5, "cess": 0}
print(jewellery["notification_ref"])
# "09/2025-CT(Rate), Schedule I, S.No. 340"

# Making charges — job work SAC
making = gst.sac.get("9988")
print(making["tax_rates"])
# {"igst": 5, "cgst": 2.5, "sgst": 2.5, "cess": 0}

# Description-based lookup — when the billing software
# knows the product name but not the HSN
result = gst.lookup("gold necklace plain 22k", supply_type="B2B")
print(result[0]["hsn_code"])  # "71131120"
print(result[0]["applicable_rate"]["interstate"])  # "IGST 3.0%"

# Invoice classifier — full tax breakdown for one invoice
invoice = gst.invoice.classify(
    seller_state="MH",
    buyer_state="DL",
    items=[
        {"hsn_code": "71131120", "quantity": 1, "rate": 150000},
        {"hsn_code": "9988",     "quantity": 1, "rate": 16000}
    ]
)
print(invoice["transaction_type"])   # "interstate"
print(invoice["total_tax_amount"])   # 5300.0
print(invoice["items"][0]["igst_amount"])  # 4500.0
print(invoice["items"][1]["igst_amount"])  # 800.0

The notification_ref field in every response — "09/2025-CT(Rate), Schedule I, S.No. 340" — is the CBIC notification that governs the rate. A CA auditing the invoice can verify that the rate applied matches the notification. That is an audit trail built into the API response, not added manually.

For CA firms serving jeweller clients

The reconciliation problem in the jewellery trade is predictable and preventable. The most common GSTR-2B mismatches for jewellery businesses:

• Mismatch 1 — Making charges not broken out. Supplier files GSTR-1 with a composite rate. Buyer expects 5% on making charges to appear in GSTR-2B. It doesn't — because the supplier filed at 3% on the whole invoice. ITC for the making charges is either wrong or missing.
• Mismatch 2 — Wrong HSN digit depth. A jeweller above ₹5 crore turnover files GSTR-1 with 4-digit HSN (7113) instead of 8-digit (71131120). The GSTN system allows it but creates an HSN-wise summary mismatch in GSTR-9.
• Mismatch 3 — Old gold exchange not documented. Customer surrenders old gold. Jeweller doesn't record the exchange value clearly. Tax is computed on the full new jewellery value instead of the net addition. Over-collection of GST from the customer — which is a compliance issue in itself.
• Mismatch 4 — Job worker files under composition scheme. If the karigar doing making charges is a composition taxpayer, they cannot charge GST on services. The jeweller cannot claim ITC on making charges in this case. But billing software often assumes all making charges come with 5% ITC available. The assumption is wrong for unregistered or composition karigars.

What to verify when onboarding a jeweller client:

• Is the jeweller's turnover above ₹5 crore? → E-invoice mandatory, 8-digit HSN mandatory
• Are making charges billed as a separate line at 5%? → Check last 3 months of GSTR-1
• Are job workers registered or composition? → Affects ITC eligibility
• Is the old gold exchange process documented? → Check purchase records

The two HSN codes that cause the most confusion

7113 vs 9988 — these two codes need to appear together on the same invoice. 7113 is the finished jewellery (goods, 3%). 9988 is the making/job work service (service, 5%). Billing software that treats the invoice as a single goods supply and applies 7113 to everything is generating non-compliant invoices.

7117 — imitation jewellery at 18% — this one catches jewellers who sell both gold and fashion jewellery. Switching between Chapter 71 (precious metals) and 7117 (imitation) on different products requires the billing software to classify correctly at the product level, not at the business level. A jeweller selling both types needs two HSN codes active in their billing system with two different tax rates. Many billing apps default to the jeweller's primary category for all products.

Quick reference for developers

Summary

Gold GST is not complex in rate — 3% on gold, 5% on making charges, 0.25% on uncut diamonds. It is complex in execution — because every invoice has multiple line items at different rates, the supply type changes the tax column structure, the digit depth requirement changes with turnover, and old gold exchanges introduce a different tax base entirely.

Billing software that handles all of this correctly requires dynamic classification, not a hardcoded rate table. The rates have not changed since September 2025. The compliance requirements around IRN generation, HSN digit depth, and making charges separation have only tightened.

If you are building for jewellers — or serving them as a CA — the place where errors compound is at invoice creation. Get the classification right at that point and everything downstream — GSTR-1, ITC reconciliation, GSTR-2B matching, IRN validity — follows correctly.

pip install gstaccelerator
npm install gstaccelerator

Free tier. 1,000 calls/month. Try the HSN lookup at gstaccelerator.in/docs.

All rates verified against CBIC Notification 09/2025-CT(Rate) and 10/2025-CT(Rate), effective 22 September 2025. HSN classifications per Customs Tariff Act Chapter 71. Rule 32(5) per CGST Rules 2017.