Have you ever thought of gold jewellery price calculation? The price you pay for the jewellery is significantly impacted by every component of the bill. The cost of gold is determined by several elements such as hallmark charges, making fees and gold’s purity measured in carat.
The price of 10 grams of 24 carat gold on Wednesday (May 8) was Rs 73,655. Last month the yellow metal’s 24 carat version touched a high of Rs 75,955 per 10 gram. Even as the price of gold is appreciating constantly, many buyers do not understand how the price of gold is determined. Knowing this will protect them from future scams involving low-quality gold.
How the gold jewellery price is calculated by jewellers
Following is the formula used commonly for gold jewellery price calculation
Final price of the jewellery = {Price of gold X (Weight in grams)} + Making charges + GST at 3% + Hallmarking charges
Always keep in mind that purity of gold is the biggest determinant of jewellery’s price. 24K, 22K, 18K, 14K and so on are possible values for this. Each of these has a different pricing.
The price of gold increases with its purity. As a result, 14K gold is least expensive and 24K gold is costliest.
Advertisement
Different forms of gold carat as per purity or fineness
| Carat | Purity | Description |
| 24K | 100% Gold | Soft in nature due to purity. Generally, not used for making jewellery. |
| 22K | 91.6% Gold | Used for making jewellery.Other metals or alloys such as zinc, copper or silver are added to gold to make it more durable and stronger. |
| 20K | 83.3% Gold | |
| 18K | 75% Gold |
Other Charges
Jewellers also impose making charges. These are often computed as a percentage or on a per-gram basis. Some jewellers combine both methods.
Additionally, GST is applied to total price of gold jewellery, including making charges. Since selling hallmarked gold is mandatory, hallmarking fees are charged.
Here is an example of calculation of gold chain price:
| Particulars | Amount |
| Price of 15 grams 22K gold chain | Rs 1,08,570 (Rs 7,238X15 grams) |
| Making charges for 15 grams gold chain | Rs 7,500 (Rs 500X15 grams) |
| Total price of gold chain | Rs 1,16,070 (Rs 1,08,570 + Rs 7,500) |
| Adding GST @3% | Rs 3,482 (3% of Rs 1,16,070) |
| Hallmarking charges | Rs 45 |
| Final bill | Rs 1,19,597 |
Things to consider before purchasing gold jewellery:
Combined Gold and Gemstone purchase
When purchasing jewellery containing both gold and gemstones, the weight of each should be determined independently. Some dishonest jewellers charge you as though everything is gold after weighing it all together.
However, just the weight of the gold matters if you decide to sell or trade it afterwards. To determine the gold’s worth, the weight of the diamonds will be removed.
Bill of purchased jewellery
Make sure the bill from the jeweller has all the details about the gold jewellery. The Bureau of Indian Standards (BIS) says it should include what the jewellery is, how much gold it has, its purity and hallmarking charges. If there are gems, their price should be listed separately on the bill.
Advertisement
Hallmarking of jewellery
When you buy gold jewellery, make sure it has BIS hallmarking signs that show it’s certified by the government. Hallmarking became compulsory in June 2021 with new signs starting in July 2021. Look for three signs: BIS logo, purity grade, and a unique 6-digit code called HUID. Since April 2023, jewellers can’t sell gold jewellery without this code.
For buyers, understanding gold jewellery prices is essential since they’re influenced by various factors like the cost of gold, making charges, hallmarking fees and GST. Especially in India, where gold carries cultural significance, being aware of how prices are determined becomes crucial.
Want to learn the art and science of managing your money? The 1% Club can help. Details here
Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before making any investment decision.
