GST on Silver, Diamond & Precious Stones: Tax Guide for Jewellery Retailers

In India, jewellery made of gold, silver, platinum and diamonds is taxed at 3% Goods and Services Tax (GST) on the full invoice value, including metal, stones and making charges, making it a key cost factor for retailers and buyers. Rough or uncut precious stones and raw diamonds attract a concessional 0.25% GST, while job work services in jewellery manufacturing are taxed at 1.5%.

The applicable GST rate also depends on whether stones are raw, polished, mounted or part of finished jewellery, directly affecting pricing, margins and compliance for jewellery businesses.

What are the GST rates on silver?

Silver is subject to 3% GST in India, making correct classification essential for jewellers, bullion traders and retailers. This rate applies to silver in raw, semi-manufactured and finished forms, including bars, coins, utensils and jewellery, based on the correct Harmonised System of Nomenclature (HSN) classification. For plain silver, the commonly used HSN code is 7106.

GST on silver jewellery and making charges

Silver jewellery is taxed at 3% GST on the transaction value of the ornament, which typically includes the cost of silver, design and any embedded components, depending on the invoice structure.

When making charges are billed separately, they are generally taxed at 5% GST as job work or manufacturing services, depending on the nature of supply and the applicable GST notification. If making charges are included in the final jewellery price, the entire value is taxed at the applicable jewellery GST rate.

Input Tax Credit (ITC)

Registered jewellery businesses can claim ITC on eligible purchases, including silver stock, packaging materials and certain input services, subject to GST compliance conditions. Proper invoices and timely return filing are required, and ITC helps reduce the overall tax burden on operations. 

What is the GST on diamonds?

Diamond jewellery is taxed at 3% GST on the invoice value of the finished ornament, which usually includes the value of the diamond, metal and making charges, depending on how the invoice is structured. For jewellers, the key factor is whether diamonds are sold as loose stones or as part of finished jewellery.

GST rates and HSN classification for diamonds

GST rates for diamonds vary by form. Rough, unworked or sawn diamonds under HSN 7102 attract 0.25% GST, while certain cut and polished diamonds may attract 1.5% GST, depending on classification and applicable GST schedules. Since classification rules can change, jewellers must confirm the latest HSN mapping before billing.

GST on diamond making charges and job work

When diamonds are set into jewellery such as rings or necklaces, making charges form part of the overall taxable value and the final product is typically taxed at 3% GST on the total transaction value. 

If making charges are charged separately as labour or manufacturing services, they may fall under Heading 9988 and attract 1.5% GST in many jewellery-related job work cases, subject to the latest Central Board of Indirect Taxes and Customs (CBIC) notifications and correct service classification.

ITC and compliance for the diamond business

Registered jewellers can claim ITC on eligible purchases and input services related to diamond jewellery, provided invoices are valid and GST returns are properly filed. Accurate documentation, stock records and correct invoicing are essential to ensure compliance and avoid disputes.

What is the GST on precious stones?

The GST on precious stones in India depends on whether they are rough, unworked or processed into finished forms, as per the CBIC GST rate schedule.

What are the GST compliance tips for jewellery retailers?

Jewellery retailers must maintain strong GST compliance due to high-value inventory, frequent stock movement and job work transactions.

To do so, they must:

• Ensure GST registrations are active and up to date for all business locations.
• Use correct HSN codes for gold, silver, diamonds and precious stones.
• Apply the correct GST rate to jewellery value and making charges.
• Issue proper tax invoices for every sale with complete and accurate details.
• Maintain accurate purchase, sales and stock records.
• Track wastage, old jewellery exchange and repair transactions properly.
• Use delivery challans for job work movement or branch transfers.
• Reconcile supplier invoices before claiming ITC.
• Claim ITC only on eligible purchases supported by valid documents.
• File GSTR returns and pay taxes within due dates.
• Maintain records of high-value transactions and customer details where required.
• Regularly review GST notices, updates and rate changes.
• Use accounting or billing software to reduce manual errors.
• Preserve invoices and compliance records for audits and assessments.

Conclusion

Understanding GST on silver, diamonds and precious stones enables jewellery retailers to price products accurately, manage invoices correctly, claim eligible ITC and maintain full compliance with tax regulations. Clear HSN classification, disciplined stock tracking and timely GST return filing are essential to avoid errors and ensure smooth day-to-day operations.

For jewellers, efficient compliance is not just about meeting tax requirements but also about improving accuracy and financial control across the business. Tools like TallyPrime help streamline GST billing, inventory management, purchase reconciliation and return filing, making jewellery operations more organised, compliant and reliable.