Discover the impact of the 3% GST rate on silver. Learn about HSN codes and how to calculate final silver prices including making charges.
Prior to the implementation of Goods and Services Tax (GST), silver was subject to a 1% excise duty and varying Value Added Tax (VAT) rates across states, creating a complex tax framework for silver transactions. The introduction of GST simplified this by replacing multiple taxes with a uniform 3% GST rate. This article will explore the GST rates for various silver products, their associated HSN codes, and demonstrate how to calculate taxes on silver purchases.
GST Rates on Silver with HSN Code
The Harmonised System of Nomenclature (HSN) code 7106 provides a standardized classification for silver articles, enabling businesses to adhere to GST regulations more efficiently. Different forms of silver, including powder, sheets, and bars, are assigned distinct HSN codes, which streamlines tax filings, minimizes confusion, and facilitates smoother trade. Below is a comprehensive overview of GST rates for various silver products and their respective HSN codes.
| Silver Items | HSN Code | GST Rate |
|---|---|---|
| Silver (including gold or platinum-plated silver) unwrought or in semi-manufactured forms or powder form | 7106 | 3% |
| Silver powder | 71061000 | 3% |
| Unwrought Silver | 710691 | 3% |
| Other Unwrought Silver | 71069100 | 3% |
| Silver grains | 71069110 | 3% |
| Other forms of silver | 71069190 | 3% |
| Semi-manufactured silver | 710692 | 3% |
| Sheets, Plates, Strips, Tubes and Pipes | 71069210 | 3% |
| Silver Bar | 71069220 | 3% |
| Other semi-manufactured silver | 71069290 | 3% |
Under GST law, silver is subject to Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST), and Integrated Goods and Services Tax (IGST), based on the supply location. This taxation structure is consistent with that applied to other precious metals.
How to Calculate the Silver Price
The ultimate cost of silver is determined by several factors, including applicable taxes, hallmarking expenses, and making charges. The following formula can be utilized to compute the price inclusive of tax:Silver Price = (Price per gram of silver x Quantity of silver purchased x Purity percentage of silver) + 3% GST.This calculation may also incorporate additional GST on making charges. For instance, consider purchasing 100 grams of 1% purity silver. The silver’s base price would be (95 x 100 x 1) = Rs. 9,500. The GST charges, at 3%, would be (3% of 9,500) = Rs. 285. Therefore, the total silver price before making charges is Rs. 9,500 + Rs. 285 = Rs. 9,785. If making charges for the jewelry are 5%, the final total price would be Rs. 9,785 + (5% of Rs. 9,785) = Rs. 10,274.25. This formula ensures purchasers have clear insight into the cost breakdown of their silver based on its weight and purity.
Impact of GST on Silver
This comparative table illustrates the price of silver before and after GST implementation, offering insight into its effect on consumer purchasing power.
| Particulars | Pre-GST Price | Post-GST Price |
|---|---|---|
| Silver price (1 kg) | 99,500 | 99,500 |
| Custom Duty (10%) | 9,950 | 9,950 |
| Sub-total | 1,09,450 | 1,09,450 |
| Excise duty (1%) | 1,094 | NA |
| Sub-total | 1,10,544 | 1,09,450 |
| VAT (1%) | 1,105 | NA |
| Sub-total | 1,11,649 | 1,09,450 |
| GST on silver (3%) | NA | 3,284 |
| Sub-total | 1,11,649 | 1,11,734 |
| Making charges on 1KG (12% of 99,500) | 7,920 | 7,920 |
| Sub-total | 119,569 | 1,20,654 |
| GST on making chargers (5%) | NA | 496 |
| Sub-total | 1,19,569 | 1,21,150 |
The introduction of GST has led to an increase in the final price of 1kg of silver, primarily due to the 3% GST on the metal itself and the additional GST applied to making charges.
