From our childhood, teenage years and adulthood to the time we have children or even grandchildren, buying gold jewellery is like a tradition in our country. It has immense cultural value for many people across India, especially on occasions such as weddings.
But no matter when and for what purpose you buy gold, it’s always quite an expensive affair, isn’t it? That’s why, as a buyer, it’s very important to know what your jewellers will charge you for the jewellery you buy from them.
So here’s a guide to help you understand how a jeweller calculates the price of gold jewellery and the factors that go into calculating the price of gold.
Every morning, gold dealers and retailers work according to the daily gold price set by the Gold Jewellers Association. According to a Forbes report, every city has its local gold association, which announces gold prices every day.
This is why there are price differences in every city, even for the same weight of gold item. However, there is only a small difference in prices between cities as there are other major factors that affect the final price of jewellery items, such as manufacturing costs, taxes and the purity of the gold. It is therefore important to know the formula used by jewellers to calculate the final price of jewellery.
The formula used to calculate the gold price is
Final price of jewellery = price of gold per gram (22 carat or 18 carat) X (weight in grams) + maker’s charge/gram + Goods and Services Tax (GST) on (price of jewellery + maker’s charge).
The example below may help you to understand this calculation:
For example, the gold price quoted by the jeweller is
Price of 10 grams of 22 carat gold = Rs 30,000
Price of 1 gram of 22 carat gold = Rs 3,000
Weight of gold item 20 grams
Making charge= Rs 300/gram
GST= 3% (flat rate)
So the total price of the jewellery would be Rs 3,000 x 20 grams + (20 grams x Rs 300) = Rs 66,000
If you apply GST @ 3% on this total price, you will get
Rs 66,000 + 3% = Rs 67,980.
Therefore, you will have to pay Rs 67,980 for this purchase of jewellery.
