How Gold Jewelry Price Is Calculated By Jewelers In India (2024)

Purchasing gold jewelry is quite an expensive affair. That’s why as a buyer, it is very crucial to know how your local jeweler is charging you for the jewelry item that you purchase from their store. There are also several other factors that must be kept in mind while buying gold jewelry.

Here’s a guide to know how a jeweler calculates the price of gold jewelry and the factors that affect the calculation of the gold price.

Why Do Gold Jewelry Prices Differ In India?

In India, gold is much more than just a yellow metal. Indians are also emotionally attached to gold and that is why they strongly believe in making gold jewelry not just as an ornament for long-term, but also as a great backup resource at the times of financial lows.

However, while doing jewelry shopping, you will find that every shop has different pricing attached to the gold jewelry. Even when, the rate of gold is same as per its purity (in carat) and weight (in grams), but still there is no standard pricing for every gold item in the market.

This is where it’s important to understand how jewelers calculate the gold jewelry rates?

Calculation of the Gold Rate In India

Every morning, gold traders and retailers work as per the daily price set up by the gold jeweler association. Every city has their local gold association that declares gold rates every day.

That is why every city has price differences even for the same weight of the gold item. However, there is only a slight difference in the prices across the cities, as there are other major factors which affect the final price of jewelry items, such as making charges, taxes and purity of gold. That is why it is important to know which formula is used by the jewelers to calculate the final price of jewelry.

The formula used by the jewelers for gold rate calculation is:

Final price of the jewelry = Price of gold per gram (22 carat or 18 carat) X (Weight in grams) + making charges/gram + Goods and Services Tax (GST) on (Price of jewelry + making charges).

The below mentioned example can help you understand this calculation better.

For instance, the gold rate quoted by the jeweler is:

• Price for 10 grams 22 carat gold = INR 30,000
• Price for 1 gram 22 carat gold= INR 3,000
• Weight of gold item: 20 grams
• Making charge= INR 300/gram
• GST= 3% (flat rate)

So, the total price of jewelry would be: INR 3,000 x 20 gram + (20 gm x INR 300) = INR 66,000

When you apply GST @ 3% on this total price, you get:

INR 66,000 + 3% = INR 67,980.

Therefore, you need to pay INR 67,980 for this jewelry purchase.

What Factors Affect Gold Price Calculation In India?

Purity: The purity of gold is measured in the term of carat. In gold, 24 carat is considered as the purest form. However, 24 carat is not considered as useful for making jewelry. Generally, 18 carat and 22 carat is used for jewelry making. The higher the purity the more expensive the jewelry becomes.

Making Charges: Making charges is something which is not the same for every jeweler. Generally, making charges vary from 8% to 35% of the total gold rate. Buyers purchasing jewelry always have the opportunity to bargain big on the making charges which can further change the final price of gold jewelry.

Studded Jewelry: At times the gold jewelry is studded with precious gemstones. When you purchase it, the main price of gold will change if the price is measured weight-wise. One should deduct the price of the stone or gem from the total price of the, so that they can easily find the actual gold price. The cost of gemstones should be added or disclosed separately.

Gold Pricing: Gold is a tradable commodity, and thus its pricing fluctuates on an everyday basis depending upon the demand and supply and other factors. The national gold rates are published every day in newspapers and on various news-based websites such as Forbes Advisor India. However, the local jeweler’s gold rate also differs as it totally depends upon from whom they are purchasing the gold and at what price. However, the main pricing of the gold would be charged the same or with slight difference only. The above-mentioned factors generally contribute more to the final calculation of gold jewelry items.

For daily updates and more details, you can check gold prices by city on the Forbes Advisor India website.

Bottom Line

So, next time when you are buying gold jewelry, do not forget to keep a few things in mind while purchasing gold to avoid being tricked. Apart from knowing the purity of gold, it is also important to know about the exchange policies, making charges, and jewelry item warranty. Also, remember to ask for a transparent break-up of the bill, explaining all the charges and costs that have been included for ascertaining the final price of the gold jewelry.