GST on silver

Silver is highly valued in India, not just for its beauty but also as a great investment option. However, many of you don’t realise that silver is subject to special taxes. In 2017, the introduction of the Goods and Services Tax (GST) brought significant changes to the taxation of silver in India. In September 2025, the GST Council announced GST 2.0, a radical makeover that revolutionised the indirect tax system.

If you buy or trade this metal, it’s essential to understand GST on silver. Let's find out more about the applicable GST rates on silver, how to calculate the GST on silver, and its overall impact on the industry.

GST on silver with HSN code

If you are a business owner who buys or trades in silver, it’s essential to understand how GST applies. This includes understanding the current tax rate, how it is calculated, and its impact on silver prices and transactions.

The GST system classifies silver under HSN code 7106, which directly influences how GST on silver is applied across various forms. Raw or semi-finished silver, such as bars, coins, and other non-retail formats, attracts a 3% GST.

Despite the major GST slab restructuring announced in September 2025, silver retains a 3% GST rate, the same as previously. This was announced during the 56th GST Council meeting on the 3rd of September 2025, marking an indication from the Council of maintaining stability in the precious metals market amidst sweeping changes elsewhere.

Whether you're buying silver jewelry, coins, or bars, GST on silver significantly affects the final price. For traders and investors, staying compliant with GST regulations is crucial to avoid tax-related complications.

Understanding the taxation, including the applicable GST on silver, how it is calculated, and its impact on pricing, enables smarter buying and selling decisions in the silver market.

Pre- and post-GST silver rates

The taxation of silver before the introduction of GST involved a mix of state-specific charges, including VAT (value added tax), central excise duty, and customs duty. Price differences emerged between states due to varying tax structures and policies.

The current GST framework applies a consistent 3% rate nationwide, replacing those earlier scattered taxes. This uniformity simplifies compliance, reduces price disparities, and improves transparency in silver trading across India, benefiting both consumers and businesses by creating a more predictable and streamlined tax environment.

The antiquated six-slab structure of GST was streamlined into merely two prime rates in GST 2.0—5% and 18%, with a swanky 40% one for luxury and sin items. When it came to precious metals such as gold and silver, the Council opted to stick with the status quo. However, silver and gold retain a 3% GST rate, the same as previously.

Additionally, the nationwide goods and services tax regime enhances ease of doing business, particularly for inter-state silver transactions, fostering a more integrated and efficient silver market.

Types of taxes imposed on silver

The different types of taxes imposed on silver in India include:

1. Import duty: Earlier in July 2024, the Union Budget lowered the import duty on silver to 6% from 15%. Today, that 6% is divided into 5% Basic Customs Duty and 1% Agriculture Infrastructure & Development Cess. This was a reduction that made importing silver cheaper, but the government made it more stringent on plain silver jewelry.

Until 31 March 2026, it is mandatory to import plain silver jewelry based on a license issued by the government. Silver bullion, however, continues to be covered under the same 6% duty.

2. Commodity Transaction Tax (CTT): Trading silver on recognised exchanges attracts a 0.01% CTT.

3. Income tax: Profits from silver sales get taxed based on holding duration and the seller's tax bracket.

Individuals and businesses need to keep accurate records of their transactions to ensure compliance with various tax regulations. Knowing these tax implications is crucial for any business involved in the silver market, as they can significantly impact overall profitability.

How to calculate GST on silver?

To calculate GST on silver, here's what you should do:

1. Determine the taxable value: This includes not just the cost of the silver itself but also any additional charges, such as making fees or handling charges. It's crucial to ensure that all components of the final price are included in the calculation.

2. Calculate 3% of this amount for GST: Once you have the total taxable value, compute 3% of that sum to find the GST applicable on your purchase. This percentage is fixed and should be used for all silver transactions.

3. Add GST to get the final price: Finally, you add the calculated GST to the original taxable value to arrive at the total cost that you will pay for the silver.

For example, if you have silver worth ₹1,00,000 and some making charges of ₹2,000, your taxable value would be ₹1,02,000. The GST would then be ₹3,060 (3% of ₹1,02,000). Therefore, the total cost would be ₹1,05,060.

Impact of GST on the silver industry

Here's how the goods and services tax has impacted the silver industry:

1. A more apparent tax structure: A single tax replaced multiple levies, making it easier for businesses in the industry to manage their tax obligations.

2. Lower compliance burden: Businesses now handle fewer tax filings, resulting in a lighter compliance burden. GST 2.0 is not merely a change in tax rates. It introduced additional compliance features, including advanced e-invoicing, seamless Input Tax Credit matching, and expedited refunds.

3. Better supply chain flow: Input tax credits work smoothly, reducing costs and errors for businesses.

GST input tax credit (ITC) on silver

Silver businesses can claim ITC for GST paid when purchasing goods or services. This tax credit offsets GST for silver collected from sales. The system helps cut effective tax costs and promotes GST compliance among traders. Companies now have an easier time reconciling their ITC claims, reducing some of the compliance hassle.

Also Read-: How will GST affect your investments?

GST on silver coins and bars

Investment products, such as silver coins and bars, are subject to a 3% GST. The rate of silver remains unchanged in GST 2.0. However, some Government of India commemorative coins might qualify for GST exemption. As a savvy investor, you should verify the GST rules before purchasing specific silver items.

GST on silver ornaments

Silver jewelry faces higher tax rates than raw silver. GST on silver ornaments combines 3% on the metal value plus 5% on the crafting charges. The rate of silver remains unchanged in GST 2.0. This raises the total tax cost for ornamental silver. When purchasing silver jewelry, be sure to factor in these additional charges.

Whether you're purchasing silver jewelry, coins, or bars, GST plays a key role in determining the final cost. For traders and investors, GST compliance is essential to avoid any tax-related issues. By understanding silver taxation, you can make more intelligent buying and selling decisions.

Conclusion

GST has reshaped silver taxation across India. The uniform GST on silver at a rate of 3% makes tax compliance more straightforward. Overall, despite all the sweeping changes ushered in by GST 2.0, silver's GST rate remains unchanged at 3%. Silver businesses benefit from simpler processes and better supply chains. However, you should note that there is a higher GST on ornamental pieces. Knowledge of GST for silver ornaments helps you make better choices about silver purchases and investments.

Some financial institutions like Axis Bank support post-GST business operations through the GST-based Overdraft Scheme. This funding option enables MSMEs to manage their working capital effectively using GST returns data.

The Overdraft Scheme's key benefits include loans ranging from ₹10 lakhs to ₹150 lakhs, catering to various MSME needs, with interest payable only on the utilised amounts. It also comes with a 12-month renewal cycle from the date of the first drawdown. This facility enables businesses to maintain a healthy cash flow while adapting to GST requirements.

Frequently Asked Questions

What is the HSN code for silver ornaments?

Silver ornaments use HSN code 7113, which differs from the code for raw silver, 7106. This distinction affects GST calculations. While raw silver is taxed at a single rate, finished silver jewelry may be subject to a different GST rate, which can impact both buyers and sellers.

What is the difference between the GST rate on silver and other precious metals like gold?

Both silver and gold are subject to a 3% GST. These rates remain the same in GST 2.0. These matching rates influence how people choose between precious metal investments. Investors often compare the potential returns, liquidity, and market trends of different metals before deciding which one to buy.

How is silver taxed in India?

For silver traders, this translates into a 3% GST, a 6% import duty (divided between BCD and AIDC), a negligible 0.01% CTT on exchange transactions, and income tax on gains, which varies depending on the holding period and tax slab.

Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.

Tax and GST regulations are subject to change. The information in this article is based on applicable laws, rules, notifications, and interpretations in force as on the date of publication and may change due to amendments, judicial decisions, or regulatory updates.