Kerala is implementing a significant change in its gold market structure by introducing uniform pricing for 18-carat gold across the state. According to reports from Mathrubhumi, a joint meeting of various gold and jewellery trade associations in Kerala has decided to implement a uniform price structure for 18-carat gold starting this Tuesday. The meeting was chaired by T S Kalyanaraman from Kalyan Jewellers and attended by key industry representatives including Dr B Govindan from AKGSMA, K Surendran, Adv S Abdul Nazar from KGSMA, M P Ahammed, A K Nishad, O Asher from KJF, and Shaju Chirayath from KGSDA.
The uniform pricing initiative responds to notable surge in market demand for 18-carat gold as it offers affordability compared to higher purity options. As reported by Mathrubhumi, this 750 purity gold has become increasingly popular among consumers due to its practicality and cost-effectiveness. The 18-carat gold contains 75% pure gold and 25% other metals, making it a preferred choice for wedding bands, engagement rings, and other jewellery pieces due to its durability and resistance to damage.
The current gold pricing in Kerala shows significant price differences across purity levels. According to market data, 24-carat gold is priced at ₹1,42,800 per 10 grams, while 22-carat gold is available at ₹1,30,900 per 10 grams. In contrast, 18-carat gold is currently priced at ₹1,07,100 per 10 grams, representing a ₹35,700 difference between the highest and lowest purity options. The uniform pricing system aims to eliminate these price variations across different jewellers in the state.
22-carat gold attracts 3% GST on its value and 5% GST on making charges with standardized tax rates across all purity levels. According to GST guidelines, the tax calculation follows a specific formula where GST on gold value = ₹1,30,000 × 3% = ₹3,900 and GST on making charges = ₹5,000 × 5% = ₹250. The total GST amount is ₹4,150, bringing the final payable amount to ₹1,39,150 for a 10-gram 22-carat gold chain. All jewellery articles are classified under HSN code 7113, with the GSTIN of the jeweller and HSN code appearing mandatory on valid invoices.
The different gold purity levels offer varying characteristics and pricing, but GST rates remain uniform across all purities - 22-carat, 18-carat, and 24-carat gold all attract identical tax percentages. 24-carat gold is 99.9% pure gold while 22-carat gold contains 91.6% pure gold and 8.4% other metals. For gold loan purposes, the tax paid at the counter never travels into loan assessment - lenders value gold based on RBI-mandated benchmarks using IBJA's closing price or 30-day average, with loan-to-value ratios ranging from 85% to 75% depending on loan amount. The widespread belief that higher purity means higher tax rates is incorrect, as the percentage remains constant regardless of karat value.
