For many Indian families, Diwali shopping means one thing above all: buying gold. Considered an auspicious purchase, gold is closely tied to the festival's promise of wealth and prosperity, with many households setting aside savings throughout the year to buy the precious metal on the occasion.
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However, rising gold prices have made the traditional festive purchase increasingly expensive. Growing investor interest in gold as a portfolio diversification tool, coupled with its strong historical returns, has supported demand for the precious metal and added to upward pressure on prices.
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With gold prices hovering around Rs 14,000 per gram, it has become harder for people to buy gold. The cost can be even higher when purchasing jewellery. This comes as charges, GST and other expenses add to the final bill. Simply put, if your budget is Rs 1 lakh, the actual value of gold you take home could be significantly lower than the amount you spend.
What Charges Add Up While Buying Gold
- Making charges: Jewellers charge for crafting gold into jewellery. These are usually calculated as a percentage of the gold value and can range from 5% to over 20%.
- Goods and Services Tax (GST): 3% GST is applicable to gold jewellery purchases, adding to the overall cost. If you buy bars or coins, making charges won't apply for GST will remain applicable.
- Hallmarking charges: Hallmarking verifies the purity of gold. Jewelers need to get hallmarking done for their jewellery. This cost sometimes may be passed onto customers.
Gold Coins and Bars
If gold costs Rs 14,000 per gram, a budget of Rs 1 lakh will buy approximately 6.93 grams of gold.
Total budget: Rs 1,00,000
Gold price: Rs 14,000 per gram
GST at 3%: Rs 420 per gram
Effective price per gram: Rs 14,420
Gold you can buy: Rs 1,00,000 ÷ Rs 14,420 = 6.93 grams
For Gold Jewellery
Total budget: Rs 1,00,000
Gold price: Rs 14,000 per gram
Making charges (5%): Rs 700 per gram
GST (3% on gold value + making charges): Rs 441 per gram
Total cost per gram: Rs 15,141
Gold you can buy: Rs 1,00,000 ÷ Rs 15,141 = 6.60 grams (approximately)
This shows that these additional charges can eat into your budget while buying gold. If you are buying gold for personal use or to mark a special occasion, jewellery may be the preferred choice. However, if your primary goal is long-term investment, gold coins or bars may be more cost-effective.
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