Why Gold Jewelry Costs More Than Gold Rate
When you check the gold rate on GoldRate24 and then visit a jeweler, you'll notice the final price is significantly higher. This difference can be 15-30% and comes from three main components: making charges, wastage, and GST. Understanding these costs is essential to getting a fair deal.
The True Cost Breakdown
For a 10-gram 22K gold necklace (at gold rate ₹7,000/gram for 22K):
| Cost Component | Amount | % of Total |
|---|---|---|
| Gold value (10g × ₹7,000) | ₹70,000 | 73% |
| Making charges (15%) | ₹10,500 | 11% |
| Wastage (5%) | ₹3,500 | 4% |
| Subtotal | ₹84,000 | - |
| GST (3% on gold value) | ₹2,100 | 2% |
| GST (5% on making) | ₹525 | 1% |
| Total Price | ₹86,625 | 100% |
You pay ₹86,625 for gold worth ₹70,000 — that's 24% above the gold rate!
What Are Making Charges?
Making charges are the labor cost that jewelers charge for crafting raw gold into a piece of jewelry. These charges compensate for:
- Artisan labor: Time and skill required to create the design
- Design complexity: Intricate designs require more work
- Technology: Machinery, CAD design, 3D printing molds
- Brand premium: Branded jewelers charge more for their name
Making Charges by Jewelry Type
| Jewelry Type | Making Charges | Why |
|---|---|---|
| Plain bangles | 5-10% | Simple design |
| Chains | 8-12% | Machine-made |
| Rings | 10-15% | Moderate complexity |
| Necklaces | 12-18% | Detailed work |
| Temple jewelry | 15-25% | Intricate craftsmanship |
| Antique/Kundan | 20-35% | Highly skilled artisan work |
| Custom design | 15-30% | One-of-a-kind creation |
Making Charges: Percentage vs Per Gram
Jewelers charge making charges in two ways:
Percentage-based: A percentage of the gold value
- Example: 15% of ₹7,000/gram = ₹1,050 per gram
- Better for: Lightweight, delicate pieces
Per-gram (flat rate): A fixed amount per gram of gold
- Example: ₹500 per gram regardless of gold rate
- Better for: When gold prices are high (making charges become a lower percentage)
Pro tip: Always ask the jeweler which method they use and calculate which works out cheaper for your purchase.
What is Gold Wastage?
Wastage refers to the gold that is "lost" during the manufacturing process. When gold is melted, hammered, filed, and polished, small amounts of gold are lost as:
- Metal shavings and filings
- Gold dust during polishing
- Residue in manufacturing equipment
- Losses during stone setting
Acceptable Wastage Rates
| Process | Wastage % |
|---|---|
| Machine-made jewelry | 2-3% |
| Handmade jewelry | 3-5% |
| Intricate filigree work | 5-7% |
| Stone-studded pieces | 3-5% |
| Antique/traditional | 5-10% |
Important: Some jewelers inflate wastage to increase profits. If a jeweler quotes more than 7% wastage for standard jewelry, consider shopping elsewhere.
GST on Gold Jewelry
GST on gold jewelry has two components:
1. GST on Gold Value: 3%
- Applied on the gold value (weight × rate per gram)
- This is straightforward and non-negotiable
2. GST on Making Charges: 5%
- Applied on the making charges amount
- Sometimes included in the making charges (ask your jeweler)
GST Calculation Example
For a 5-gram 22K ring at ₹7,000/gram with 12% making charges:
| Component | Calculation | Amount |
|---|---|---|
| Gold value | 5g × ₹7,000 | ₹35,000 |
| Making charges | 12% of ₹35,000 | ₹4,200 |
| Wastage (3%) | 3% of ₹35,000 | ₹1,050 |
| GST on gold + wastage | 3% of ₹36,050 | ₹1,082 |
| GST on making | 5% of ₹4,200 | ₹210 |
| Total | ₹41,542 |
Use our [Gold Calculator](/calculators/gold) to calculate the exact cost instantly.
Understanding BIS Hallmark
Since June 2021, it is mandatory for jewelers in India to sell only BIS-hallmarked gold jewelry. This is your assurance of purity.
What the Hallmark Contains
- BIS Logo: Bureau of Indian Standards mark
- Purity/Fineness: 999 (24K), 916 (22K), 750 (18K), 585 (14K)
- HUID (6-digit alphanumeric): Hallmark Unique Identification number
How to Verify HUID
- Visit the BIS Care app or website bis.gov.in
- Enter the 6-character HUID code
- The system shows: jeweler name, purity, and registration details
Red Flags to Watch
- Jewelry without any hallmark
- Hallmark without HUID number
- Jeweler refusing to provide HUID details
- Suspiciously low prices (may indicate impurity)
Tips for Getting the Best Deal
Before You Buy
- Check today's gold rate: Visit GoldRate24 to know the fair price
- Compare across jewelers: Making charges can vary 5-10% between shops
- Decide your budget: Know exactly how much gold (by weight) you want
- Research designs: Having a clear idea saves time and prevents impulse buying
During Purchase
- Negotiate making charges: Always negotiate — most jewelers have flexibility
- Ask for per-gram making charges: Often cheaper than percentage-based
- Request wastage breakdown: Ask why wastage is what it is
- Verify BIS hallmark: Check HUID on the BIS app before paying
- Get itemized bill: Ensure gold rate, making charges, wastage, and GST are all listed separately
- Weigh the gold yourself: Ask to see the weighing on a calibrated scale
After Purchase
- Keep the invoice safe: Required for resale, exchange, and insurance
- Note HUID numbers: Store these separately from the jewelry
- Get insurance: Insure valuable pieces with a jeweler's block policy
Exchange and Buyback Policies
Exchange Policies (Trade-in Old Gold)
- Most jewelers accept old gold at current market rate minus 5-10% deduction
- Deduction covers testing, melting, and purification costs
- Some offer full value if you exchange within the same store
Buyback Policies
- Branded jewelers (Tanishq, Kalyan) typically buy back at current rate minus 2-5%
- Local jewelers may deduct 5-15% from market rate
- Always sell to the original jeweler for the best rates
Common Scams and How to Avoid Them
- Mixing karats: Claiming 22K while using 18K. Solution: Check HUID
- Inflated weight: Including heavy clasps/locks. Solution: Weigh the gold piece separately
- Hidden stone weight: Not deducting stone weight from gold weight. Solution: Ask for stone-deducted weight
- Changeable making charges: Quoting low initially, adding later. Solution: Get written quote first
- Fake hallmark: Using copied hallmark images. Solution: Verify HUID on BIS app
Calculator: What Should Your Jewelry Cost?
Use our free Gold Calculator to instantly calculate the total cost of your gold jewelry including:
- Gold value based on live rates
- Making charges (customizable percentage)
- Wastage
- GST (3% + 5%)
Conclusion
Knowledge is your best tool when buying gold jewelry. Understanding making charges, wastage, and GST helps you evaluate whether a jeweler's price is fair. Always verify BIS hallmark, negotiate making charges, and use GoldRate24 to check live rates before stepping into a jewelry shop.
Check today's gold rate for your city on our [City Rates](/cities) page before your next jewelry purchase.
