Invoice format for jewellery

Great question about invoicing in jewellery business involving exchange of old gold for new jewellery!

Here’s how it generally works under GST and accounting principles:

Scenario:

Customer brings 100 g old gold (bullion/jewellery) for conversion into 150 g new jewellery.

Invoice & Accounting Treatment Options:

Option 1: Invoice entire 150 gms as new jewellery sale, show 100 gms as purchase (or inward supply) of old gold

• You raise a sales invoice for 150 gms at the sale price.

• Simultaneously, record purchase or inward supply of 100 gms of old gold (from customer).

• This reflects full sales and purchase value.

• GST applies on the net value (sale price - purchase price) depending on valuation rules.

• This method is transparent and preferred for proper accounting and tax audit trail.

Option 2: Invoice only the net quantity (50 gms)

• Invoice only the difference (150 - 100 = 50 gms) as sale.

• The old gold is treated as supply received, so no invoice on 100 gms.

• This method can be tricky in GST as the old gold supplied by customer is treated as supply to you — requires proper valuation and documentation.

Which method is correct as per GST?

GST Law and Valuation Rules:

• Old gold brought by the customer is treated as supply to the dealer.

• Dealer supplies new jewellery in exchange.

• GST is levied on the net value of supply made by dealer (value of new jewellery minus value of old gold accepted).

• Dealer must issue tax invoice for the supply made to the customer.

Relevant References:

• Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017: Provides GST rates on gold jewellery.

• Valuation Rules under CGST Act, 2017 (Rule 27): Covers valuation when goods are exchanged or supplied for other goods.

• GST Council Clarifications on Gold Jewellery: States the dealer has to issue invoice for new jewellery, consider old gold value, and GST applies on the net difference.

Practical and Compliant Format:

• Invoice shows the full weight and price of new jewellery (150 gms).

• Separately mention old gold weight and value accepted (100 gms).

• Net amount payable by customer = value of 150 gms new jewellery – value of 100 gms old gold.

• GST charged on this net amount.

Summary:

You should raise invoice for the full new jewellery (150 gms) and show the old gold brought by customer separately as inward supply or purchase. GST is on the net value. This is aligned with GST valuation rules and audit standards.