Making Charges on Gold: How They Work and What GST Applies

A making charge is what the jeweller bills for turning metal into a piece. It is labour, design and the shop’s margin on that labour, and it sits on top of the gold, which is priced separately by weight and purity.

Two things about it are worth more than the definition. It is quoted in two ways that look comparable and are not. And the GST treatment that every article states as settled fact is answered differently in the government’s own published FAQ, using almost exactly the same worked example.

What you are actually paying for

Your bill has layers. The gold itself is a calculation anyone can check: today’s rate for that purity, multiplied by the net weight. Everything above that line is the jeweller’s, and the making charge is the largest part of it.

The charge is not arbitrary. A plain band is close to machine work; a temple-jewellery necklace is weeks of hand labour. A high making charge on an intricate piece is not a rip-off, it is what the piece cost to make. The problem is not the size of the number, it is that you are rarely given it in a form you can compare against the shop next door.

Wastage, sometimes shown as VA or value addition, is a separate line in much of Indian retail. Historically it accounted for metal genuinely lost in working. In practice it now behaves as a second charge on the same labour, and some jewellers bundle it into the making charge while others bill it separately. That means two quotes with the same “making charge” can produce different totals. Read for both words before comparing anything.

The two ways it is quoted, and why they are not comparable

A making charge comes at you either as a flat amount per gram or as a percentage of the gold value. They sound like alternative phrasings of the same idea. They behave completely differently.

A flat per-gram charge is a price for work. It stays where it is when the gold rate moves, because the work has not changed.

A percentage charge is not a price for work at all. It is a share of the metal, and it moves with the metal.

On our own gold buy price, a gram cost ₹2,350 in January 2016 and ₹12,285 in November 2025. A making charge of 12% was therefore ₹282 a gram at the start of that decade and ₹1,474 a gram at the end, for the same bangle, made the same way, by the same hands.

This is the single most useful thing to know before you walk into a shop. To compare two quotes, convert both into rupees per gram at today’s rate. A percentage quote becomes rupees per gram by multiplying today’s rate by that percentage. Once both numbers are in the same unit you can actually see which is cheaper, and quite often the answer surprises people.

Our guide to how a gold price is assembled walks through the full stack, and the 18 carat calculation shows how purity feeds into the weight side of the same sum.

The GST question, and the answer almost nobody quotes

Search for GST on making charges and you get one answer everywhere: 3% on the gold value, 5% on the making charge. It appears on jeweller sites, on comparison blogs, on tax explainers.

The government’s own sectoral FAQ asks that exact question, with its own worked example, and answers it the other way.

From the GST Sectoral Series, Gems & Jewellery, published by the Directorate General of Taxpayer Services at the Central Board of Excise and Customs:

“Question 7: When we are selling Gold, Diamond or Silver Jewellery to the end consumer (Customer) like a Gold Chain weighing 10gm at a total value of Rs. 30,000/- (gold value is Rs. 28000/- and making charges on that gold chain is Rs 2000/-), can we charge GST @3% on the total value or @3% on the gold value and @5% on making charges?

Answer: GST is payable at the rate of 3% of the total transaction value of jewellery, whether the making charge is shown separately or not.”

The reasoning is composite supply under section 8 of the CGST Act 2017. When you buy a finished ornament you are buying one thing, not a metal plus a service. The principal supply is the gold, so the gold’s rate applies to the whole transaction.

The 5% figure is not invented, it is just describing a different transaction. It is the job work rate under SAC 9988, and it governs the leg between the jeweller and the karigar who actually makes the piece. That is a service supplied to the jeweller, not to you. Somewhere along the way it got copied across into consumer advice, and it stuck.

Be clear about the size of this. On the FAQ’s own example the two readings differ by ₹40. It is not a scandal, and it is worth about 2% of whatever the making charge is, so it grows with the labour rather than with the gold. The reason to know it is not the money. It is that one of these two is the published position and the other is a habit.

Two caveats, stated plainly because this is tax. The sectoral series is the 2017-era CBEC document, hosted by the GST Council; the 3% rate on gold jewellery was retained through the September 2025 rate rationalisation, so it still describes the current structure. And an invoice can be put together in ways this single answer does not address. If your bill shows 5% on the making charge, that is a reasonable thing to ask about at the counter. It is not evidence that anyone has done anything wrong.

Tax rules change. Confirm with a qualified advisor before acting.

What your bill should let you check

Four lines, and if any of them is missing you cannot verify the total.

1. The rate and the purity it applies to. 22K and 24K are different numbers, and the rate quoted in the news is usually for one of them and not the other.
2. The net weight, separate from gross. Stones, beads and enamel are not gold and should not be billed as gold.
3. The making charge, with its unit. Per gram or per cent, stated as such. If it is a percentage, work out the rupees per gram before you agree to it.
4. Wastage or VA, if it is being charged at all. If you cannot find it, ask whether it is inside the making charge or absent.

Add the hallmark to that list. Gold jewellery hallmarking is mandatory across 380 districts after the sixth phase came into force on 2 March 2026, covering 14K through 24K, and each hallmarked item carries a HUID. Purity you can verify is the foundation the rest of the arithmetic sits on.

If you are weighing two specific retailers rather than two quotes, we have looked at Kalyan against Tanishq separately.

The part that shows up years later

A making charge is spent, not stored.

When you sell a piece back, you are selling metal. The buyer weighs it, tests the purity and pays for gold. The labour that turned it into a necklace has no resale value, because the next owner is going to melt it. Depending on the piece and where you sell, a deduction for melting or refining may come off as well.

That is not a reason to avoid jewellery. It is a reason to be honest with yourself about which purchase you are making. If you want a thing to wear, the making charge is the cost of the thing and it is a fair one. If what you want is to own gold, every rupee of making charge is a rupee that never becomes metal, and coins or bars carry far less of it. Our pieces on gold coins against bars and what to watch for with coins take that comparison further.

Questions people ask

How do I calculate making charges on gold? If it is quoted per gram, multiply by the net weight. If it is a percentage, apply it to the gold value, which is today’s rate for that purity multiplied by the net weight. To compare two quotes, put both into rupees per gram first.

Are making charges negotiable? They are the part of the bill a jeweller has room to move on, because the gold rate is not theirs to set and the tax is not either. That is why asking about the making charge specifically, rather than about a discount in general, tends to be the more productive conversation.

Is GST 3% or 5% on making charges? The government’s sectoral FAQ answers this directly: GST is payable at 3% of the total transaction value of jewellery, whether or not the making charge is shown separately. The 5% rate is the job work rate that applies between a jeweller and the maker, not on a retail sale.

Do gold coins have making charges? Usually a small one, and far below jewellery, because a coin is minted rather than crafted. It is often shown as a minting or packaging charge instead. It is still not recovered when you sell.

What is wastage or VA on gold? A charge historically representing metal lost during working. Some jewellers bill it separately from the making charge and some fold it in, so the same headline making charge can mean two different totals.

Do I get making charges back when I sell? No. A resale prices the metal. Some jewellers offer better terms on an exchange within their own store than on a cash sale, which is a commercial offer rather than a recovery of what you paid.

The short version

The making charge is the labour, and it is the part of a gold bill you can actually influence. Get it quoted in rupees per gram, because a percentage quote is a share of the metal that has grown more than fivefold in a decade for exactly the same work.

Then check the GST line. The rule everyone repeats, 3% on gold and 5% on making, is the job work rate for a transaction you are not part of. The government’s own FAQ, asked this precise question, answers 3% of the total.

Tax rules change. Confirm with a qualified advisor before acting.