service tax

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Mukund V Bhagwat

Mukund V Bhagwat (Querist)
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25 June 2016 is service tax applicable on gold ornaments making.?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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26 June 2016 No service tax applicable but excise duty applicable.

Mukund V Bhagwat

Mukund V Bhagwat (Querist)
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26 June 2016 ok.. sir thank you

Vidya Jain

Vidya Jain (Expert)
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27 June 2016 No only VAT is applicable

Mukund V Bhagwat

Mukund V Bhagwat (Querist)
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27 June 2016 yes i think exice duty is charge on sales of ornaments

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 June 2016 Excise duty is applicable on making and selling of gold ornaments.

Mukund V Bhagwat

Mukund V Bhagwat (Querist)
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27 June 2016 ok. then 1% exice duty is applicable over 6 cr turnover am I correct?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

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24 July 2025 Yes, your understanding is mostly correct, but let me clarify it precisely as per the pre-GST (Service Tax & Excise) regime in place until 30 June 2017:

✅ 1. Service Tax on Gold Ornament Making:
No Service Tax was applicable on making charges of gold ornaments if done by a jeweller through a job worker/artisan.

However, if the making charges were charged separately and not part of the sale price, in some cases they were liable under service tax, especially if provided by an organized service provider and not an individual artisan.

That said, for most traditional jewellers, the making was part of the sale—hence, not taxable under service tax, but rather under VAT/Excise.

✅ 2. Excise Duty on Gold Ornaments (Post Budget 2016):
From March 1, 2016, Excise Duty @ 1% (without CENVAT credit) or 12.5% (with credit) became applicable on manufacture of gold jewellery, subject to exemptions.

⚠️ Applicability conditions:
Excise duty was applicable only if turnover exceeded ₹6 crore in the preceding financial year.

Small-scale exemption was available for turnover up to ₹6 crore, and duty became applicable on turnover exceeding ₹6 crore in the current year.

Manufacturers were required to register under Central Excise if they crossed this limit.

✅ 3. VAT Applicability:
VAT was also applicable on the sale of gold ornaments at the applicable state rates (usually 1% to 2%).

📌 Summary:
Tax Type Applicability (Pre-GST)
Service Tax Not applicable on traditional making charges (in most cases)
Excise Duty Applicable @1% if turnover > ₹6 crore
VAT Applicable on sale of gold ornaments

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