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The final price buyers pay for gold jewelry at a jewelry store is calculated after adding various costs, mainly making charges and taxes. A buyer who knows the calculation required to determine the price of gold can quickly determine if the local jeweler has charged anything extra.
Here are a few popular ways to calculate the price of jewelry and the factors that affect the gold price in India.
Why is the price of gold jewelry different in Indian cities?
It is crucial to understand that the prices of gold jewelry differ not only among countries but also among Indian states and cities. On July 12, 2024, the cost of 10 grams of 24K gold in Mumbai was INR 64,735, whereas, on the same day, the gold price in Bangalore was INR 64,703.
Gold is initially priced in the U.S. dollar. This means all the gold India imports within the country are bought in the U.S. dollar, and the exchange rate is based on the current value in the local currency.
Then, the exchange rate, customs duty, agriculture and infrastructure development cess (AIDC), goods and service tax (GST), and jewelry-making charges are levied on it before the final price is placed on the consumer’s bill.
This is where it becomes crucial to understand how jewelers calculate the gold jewelry rates.
How is gold price calculated in India?
Every city has a gold association that declares gold rates daily after considering supply and demand, transportation or logistics costs, and gold’s overall market performance. This is why the price of gold across cities differs even for the exact weight of the article.
For instance, a jeweler has fixed the price of 22K gold (including import duty and agriculture and development cess taxes) at INR 30,000 and makes a charge of INR 300. If the buyer is looking to buy 20 grams of 22K gold ring, jewelers use the following formula to determine the final price of the gold ring, as follows:
The final price of the jewelry is 22K gold per gram X the weight of gold + goods and services tax (GST) + making charges/gram and GST on it.
The price for 10 grams of 22K gold = INR 30,000
Price for 1 gram 22K gold= INR 3,000
Weight of gold item = 20 grams
Making charge = INR 300 per gram
GST= 3% (flat-rate)
So, the total price of 20 grams of a 22K gold ring would be INR 3,000 x 20 grams + (20 gm x INR 300) + 3% GST = INR 67,980.
Therefore, you need to pay INR 67,980 for this jewelry purchase.
Factors That Affect Gold Price Calculation In India?
Remember, gold prices differ among Indian cities. However, there is only a slight difference in the prices of gold across the cities. Other significant factors that affect the final cost of jewelry items are as follows:
Taxation: Gold attracts taxes. The government imposes customs duty and agriculture infrastructure development cess (AIDC) on the import of gold into the country—the rate is passed to the consumer. In addition, a 3% good and service tax (GST) is applied to purchase physical gold.
Purity: Carats is the measurement that determines the purity of gold. The higher the purity, the more expensive the jewelry becomes. 24 carats is the most purest form of gold. However, 24-carat gold isn’t suitable for making most types of jewelry as they are very soft. Therefore, silver is added to harden the article. Generally, 18-carat and 22-carat gold are used for jewelry making.
The standard valid purity numbers of gold under the karat system are 8k, 9k, 10k, 14k, 18k, 20k, 22k, and 24k.
Read more: How to Know If Gold is Real
Making Charges: This charge varies for every jeweler but ranges from 8% to 35% of the gold rate. Buyers can ask for discounts wherever applicable, reducing the final price of gold jewelry.
Studded Jewelry: Sometimes, gold jewelry is studded with precious gemstones. Buyers should always deduct the gemstone’s weight and add its final price to the article separately.
Offers: Top jewelry brands also run “offers” and “discounts” during special events like festivals and their campaign from time to time, which buyers can take advantage of the reduced jewelry price.
Gold is a tradable commodity; thus, its pricing fluctuates daily depending on demand, supply, and other factors. The national gold rates are published daily in newspapers and on news-based websites such as Forbes Advisor India. However, the local jeweler’s gold rate also differs as it depends upon whom they purchase the gold and at what price. However, the leading pricing of the gold would be charged the same or with a slight difference only. The above factors contribute more to the final calculation of gold jewelry items.
You can check gold prices by city on the Forbes Advisor India website for daily updates and more details.
Bottom Line
So, next time you’re thinking of buying gold jewelry, remember to keep a few things in mind to avoid being tricked. Apart from knowing the purity of gold, it is also essential to know about exchange policies, making charges, and jewelry item warranties. Also, remember to ask for a transparent bill breakdown, explaining all the charges and costs included to ascertain the final price of the gold jewelry.
