The 56th Goods and Services Tax (GST) Council meeting, held on September 3, 2025, has brought about significant changes to India's indirect tax landscape. While the tax rate on gold remains unchanged, the council introduced sweeping reforms aimed at simplifying the GST structure and easing compliance. Here's a breakdown of what the meeting means for your jewellery purchases:

GST on Gold Remains Steady

The GST Council has decided to maintain the current tax rates on gold and silver. This means that gold will continue to attract 3% GST on its value. This rate applies uniformly to gold bars, coins, and jewellery.

However, when buying gold jewellery, an additional 5% GST is levied on the making charges. For example, if you purchase gold jewellery worth ₹1,00,000, you will pay ₹3,000 as GST on the gold. If the making charges are ₹10,000, you will pay an additional ₹500 as GST on those charges, bringing your total tax liability to ₹3,500.

GST Reform 2.0: Simplifying the Tax Structure

The 56th GST Council meeting also marked the introduction of "GST 2.0," a major reform aimed at streamlining India's indirect tax system. The council has decided to move towards a two-rate structure, with standard rates of 5% and 18%, eliminating the existing 12% and 28% categories.

However, a special rate of 40% will be applicable to select goods, primarily "sin" and luxury items like tobacco, pan masala, aerated beverages, high-end cars, and yachts.

These changes, set to take effect from September 22, 2025, aim to simplify compliance, reduce litigation, and provide businesses and consumers with greater predictability.

Impact on Consumers and the Industry

The decision to maintain the 3% GST on gold is expected to provide stability to the precious metals market, especially with the approaching festive season.

The broader GST reforms are expected to have several positive impacts:

• Consumers: Simplification of the tax structure may lead to lower prices for various goods and services.
• Businesses: Streamlined compliance and reduced costs, particularly benefiting MSMEs and labor-intensive sectors.
• Economy: Boost to domestic consumption and counterbalance to global trade pressures.

Other Key Decisions

In addition to the changes to the GST structure, the council has also made the following key decisions:

• GST exemption on all individual life insurance policies, including term life, ULIP, and endowment policies.
• GST reduction on various food items, such as namkeen, bhujia, sauces, pasta, and chocolates, from 12% or 18% to 5%.
• Operationalization of the Goods and Services Tax Appellate Tribunal (GSTAT) by the end of September 2025.

Conclusion

The 56th GST Council meeting has brought about significant changes to India's indirect tax system. While the GST rate on gold remains unchanged at 3%, the introduction of GST 2.0 and the move towards a simplified tax structure are expected to have far-reaching positive impacts on consumers, businesses, and the economy as a whole. Effective implementation of these reforms will be crucial in achieving the desired outcomes of ease of living and ease of doing business.