How Jewellers Actually Price Gold Jewellery
The number on the shop's rate board is never your final bill. Every jeweller adds making charges, often wastage, and then GST on top. Here's exactly how each piece of that math works.
1. The Formula
Gold Value = Rate/gram × Purity × Weight
+ Wastage = Gold Value × Wastage %
+ Making Charges = Gold Value × Making % (or) Fixed ₹/gram × Weight
= Subtotal
+ GST (3% of Subtotal)
= Total Price
2. Making Charges: Percentage vs. Fixed
Jewellers price making charges one of two ways:
- Percentage of gold value — common for branded chains (Tanishq, Malabar), usually 8-25% depending on design complexity.
- Fixed rate per gram — common for plain/traditional pieces at local jewellers, often ₹200-₹800 per gram.
Always ask which method your jeweller uses — a "12% making charge" and a "₹500/gram making charge" can work out very differently depending on the current gold rate.
3. What Is Wastage?
Wastage (also called "vaddi" in some regions) covers gold lost during crafting — cutting, filing, and polishing. Machine-made jewellery has very little wastage (0-2%), while intricate handmade pieces can have 8-12% wastage. Some jewellers fold wastage into the making charge instead of billing it separately — always ask for an itemized bill.
4. GST on Gold Jewellery
India charges a flat 3% GST on the combined value of gold + making charges (this replaced the earlier separate VAT/service tax structure). There is no separate GST rate for making charges — it's all taxed together at 3%.
5. How to Negotiate
- Making charges are usually negotiable, especially at independent jewellers — GST and the gold rate itself are not.
- Buying during festival "flat making charge" promotions (Akshaya Tritiya, Dhanteras) can save 20-50% on making charges.
- Exchange offers (old gold for new) usually deduct wastage on your old jewellery too — ask for the exact terms upfront.
Frequently Asked Questions
What is a fair making charge for gold jewellery?
Making charges typically range from 3% to 25% of the gold value depending on design complexity — plain bangles and coins are on the low end, intricate handcrafted pieces on the high end. Machine-made jewellery is usually cheaper to make than handmade.
How much GST do I pay on gold jewellery in India?
India charges 3% GST on the total value of gold jewellery, which includes both the gold value and the making charges combined.
What is wastage charge in gold jewellery?
Wastage charge covers the small amount of gold lost during the crafting process (cutting, polishing, filing). It's usually charged as a percentage of the gold value, separate from making charges, though some jewellers combine the two into one figure.
Is 22K or 24K gold better for jewellery?
22K (91.6% pure) is the standard for Indian jewellery because pure 24K gold is too soft to hold intricate designs. 24K is typically reserved for coins and bars, not everyday jewellery.
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