Gold prices in India have climbed above ₹75,000 per 10 grams, reaching new highs. Buyers, particularly during festivals like Akshaya Tritiya, should understand how jewellers determine the final cost of gold jewellery to avoid overpaying.
How jewellers break down the price
The calculation method includes several components. The final price covers the gold cost based on weight and purity, making charges, 3% GST, and hallmarking fees.
The basic formula works as follows:
- Price of gold × weight in grams
- Plus making charges (10–25% of gold value)
- Plus 3% GST on the total
- Plus hallmarking charges
Purity affects the price significantly. The price of gold will depend on the karat (KT) bought by you. This can be 24KT, 22KT, 18KT, 14KT, etc. The price of each of these are different. The purer the gold, the higher the price. Hence, 24KT gold will be expensive and 14KT will be cheaper.
Making charges and hidden costs
Making charges, sometimes called wastage fees, differ by jeweller. Some calculate them as a percentage of the gold price, while others use a flat rate per gram. A jeweller might charge 1% of the gold price per gram—if gold costs ₹6,500 per gram, that’s ₹65 per gram in making charges.
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A 10-gram chain would add ₹650 before GST. Some jewellers combine both methods, making comparisons difficult.
Gemstones add another layer of complexity. If a piece includes diamonds or other stones, their weight must be excluded from the gold calculation. Some jewellers weigh the entire piece and charge for it as gold, which increases the price unfairly.
A real-world example
Consider a buyer purchasing a 22K gold chain weighing 11 grams and an 18K diamond ring weighing 3.5 grams. The jeweller lists 22K gold at ₹65,000 per 10 grams and 18K at ₹56,000 per 10 grams. Making charges are a flat ₹500 per gram.
For the chain:
- Gold cost: ₹71,500 (₹6,500 × 11 grams)
- Making charges: ₹5,500 (₹500 × 11 grams)
- Subtotal: ₹77,000
- GST (3%): ₹2,310
- Hallmarking: ₹45
- Final price: ₹79,355
For the ring:
- Gold cost: ₹19,600 (₹5,600 × 3.5 grams)
- Making charges: ₹1,750 (₹500 × 3.5 grams)
- Diamond cost: ₹4,500
- Subtotal: ₹25,850
- GST (3%): ₹776
- Hallmarking: ₹45
- Final price: ₹26,671
The total cost reaches ₹1,06,026, with charges beyond the gold itself adding to the price.
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For many families, gold jewellery serves as a financial safety net. However, when making charges and GST add to the price, the gap between buying and reselling widens.
What to check before buying
Under Bureau of Indian Standards rules, jewellers must provide a detailed bill. It should include:
- Description of the item
- Net weight of gold
- Purity (karat and fineness)
- Separate price for gemstones, if any
- Hallmarking charges
Since June 2021, hallmarking has been mandatory. A hallmarked piece must display:
- BIS logo
- Purity grade (e.g., 22K916 for 22K gold)
Prices can vary even for the same karat. Vikas Singh, MD & CEO of MMTC-PAMP, explains that differences come from refining costs, transportation, and the jeweller’s markup. “The price of gold jewellery varies from one jeweller to another due to multiple reasons like differences in the cost of acquiring the gold,” he stated.
The upward trend in gold prices shows no signs of stopping. The rest depends on the details buyers overlook.
