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GST ON MAKING CHARGES OF GOLD JEWELLERY

06 July 2018

I am manufacturing GOLD ornaments and I pay MAKING CHARGES to local urd goldsmiths . in my tax invoices i collect only gst of 3/. only on sale value not including MAKING CHARGES .whether under these circumstances I am liable to pay any taxes on MAKING CHARGES please clarify

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6 Replies

KOUSHAL JAIN (Chartered Accountant) (471 Points)
Replied 06 July 2018

Reverse Charges Mechanism (RCM) Not Applicable on MAKING CHARGES to local unregistered goldsmiths. In this case, you are not liable to pay RCM GST on Making Charges Payment to Unregistered Dealer.

Vinod Babu (24191 Points)
Replied 07 July 2018

∆ If Jeweler Charges Making Charges Separately

Value of gold – 3%
Making Charges – 18%

∆ If Jeweler not charging making charges separately

As per section 2(30) and section 8 of CGST Act , Provision of Composite Supply shall apply

And on total value of Invoice 3% GST shall be charged .

2 Like

Shivam RC (Student) (23683 Points)
Replied 07 July 2018

Agree with Vinod Sir....
But I think, the rate of GST in Gold Making Charges should be 5% instead of 18%. Initially the GST Council decided to put it on 18% Tax bracket but on 12 June 2017 meeting it was put under 5% tax bracket w.e.f 1/07/2017..

1 Like

Vinod Babu (24191 Points)
Replied 08 July 2018

Yes you are right sir.
now gold has a making charge of 5%. GST council had earlier decided 18% for gold making charges.
The tax on the making charge was then reduced to 5% due to concerns raised by various groups.

1 Like

CA Sachin M Jain (CA | GST | Refunds | Advisory | Litigation) (1313 Points)
Replied 17 December 2018

Dear Vinod & Shivam,

Can you share the notification no where it xx mention that GST on making charges of gold jewellery is 5%.

In notification no 11 CT(R) dt 28/06/2017 GST rate 5% is for JOB WORK service.
As per section 2(68) of the CGST Act, says that goods belong to REGISTER PERSON.

So as per my understanding GST rate on making charges to the customer shall be 18% and not 5% as customer being unregistered due to which such transaction doesn't falls under job work!

vinodkumar (Proprietor) (23 Points)
Replied 15 March 2019

Sir one of my client are giving their stock to goldsmith and whole stock will be taken back, till that agreed to receive Rs.75 per gram on every month, what is the GST rate to be charged on this income