Jewellery management and billing software
How to calculate the price of gold jewellery: formula and worked example
The formula jewellers use to price gold jewellery in India: gold value by purity, making charges, stones and 3% GST, with a step-by-step worked example.
Two necklaces with the same weight can have very different prices. That is because a jewellery bill is made up of several parts, and each is calculated differently. Once you know the formula, any bill becomes easy to check, whether you are buying jewellery or writing the bill yourself.
The formula
Final price = (Gold value + Making charges + Stone charges) + GST
Where:
- Gold value = net weight of gold × today's rate for that purity
- Making charges = a charge for the craftsmanship, either per gram or as a percentage of gold value
- Stone charges = the separate value of any diamonds, gems or stones
- GST = 3% of the total value of the jewellery
Let's look at each part.
1. Purity: 24K, 22K and 18K
Pure gold is 24 karat, but it is too soft for most jewellery, so it is mixed with other metals. The karat tells you how much of the piece is gold.
| Karat | Gold content | Also marked as | Common use |
|---|---|---|---|
| 24K | 99.9% | 999 | Coins and bars |
| 22K | 91.6% | 916 | Most traditional jewellery |
| 18K | 75% | 750 | Diamond and stone-set jewellery |
Jewellers publish a separate daily rate for each purity. Always check which rate is being applied. A bill for 22K jewellery should use the 22K rate, not the 24K rate.
2. Gross weight and net weight
The gross weight is the weight of the whole piece. If it contains stones, beads or other materials, their weight is subtracted to give the net weight of gold. Gold value should be calculated on net weight only. Stones are charged separately, at their own value.
3. Making charges and wastage
Making charges pay for the design and the karigar's work. They are quoted in one of two ways:
- Per gram, for example a fixed amount for each gram of net weight
- As a percentage of the gold value, for example 10% or 15%
Some jewellers also add a separate wastage charge (sometimes called value addition) to cover gold lost during manufacturing. Others include it in the making charge. Handmade and intricate designs usually carry higher making charges than simple machine-made pieces.
4. Stone charges
Diamonds, rubies, emeralds and other stones are priced separately, usually by carat and quality, and added to the bill as their own line. This is why the stone weight must be removed from the gold weight.
5. GST
GST on gold jewellery is 3%, charged on the full value of the jewellery, including gold, making charges and stones.
Worked example
Suppose you are buying a 22K gold chain with a small stone pendant. We will use an illustrative 22K rate of ₹10,000 per gram and making charges of 12% of gold value.
| Item | Calculation | Amount |
|---|---|---|
| Gross weight | Whole piece | 10.500 g |
| Stone weight | Removed from gold weight | 0.500 g |
| Net gold weight | 10.500 − 0.500 | 10.000 g |
| Gold value | 10.000 g × ₹10,000 | ₹1,00,000 |
| Making charges | 12% of ₹1,00,000 | ₹12,000 |
| Stone charges | Priced separately | ₹2,500 |
| Value before GST | 1,00,000 + 12,000 + 2,500 | ₹1,14,500 |
| GST | 3% of ₹1,14,500 | ₹3,435 |
| Total | ₹1,17,935 |
Notice how much the making charge adds: in this example, more than the stones and GST put together. When comparing prices between shops, compare the making charge, not just the gold rate.
Hallmarking and HUID
Hallmarking certifies the purity of gold jewellery. Hallmarked jewellery in India now carries a six-character HUID (Hallmark Unique Identification) code, which lets you verify the piece using the BIS CARE app. Ask for the HUID to be printed on your bill.
What about exchanging old gold?
When you exchange old jewellery, the jeweller tests its purity, weighs it, and values it at the rate for that purity, often minus a deduction for melting and refining. That value is then adjusted against the new purchase. Deductions vary by jeweller, so ask how the value was calculated. How GST applies to an exchange can depend on how the transaction is billed; if it matters for your accounts, check with your accountant.
Tips for buyers
- Check the day's rate for the right purity before you visit.
- Ask for gross weight, stone weight and net weight on the bill.
- Ask whether making charges are per gram or a percentage, and compare between shops.
- Make sure stones are not being charged at the gold rate.
- Check the HUID on the bill against the piece.
For jewellers: getting every bill right
Behind every jewellery bill are the same steps: pick the right daily rate, subtract stone weight, apply the making charge the right way, add stones, adjust old gold, and apply GST. Done by hand or in a spreadsheet at a busy counter, small errors add up, in the shop's favour or the customer's.
Code GOLD, our jewellery management software, does this automatically. Each piece is tagged with its gross, stone and net weight and purity. You enter the day's rates once in the morning, and every bill applies the correct rate, making charges, stones, old gold exchange and GST. It also manages savings schemes, karigar accounts and GST reports.
If you run a jewellery showroom, book a free demo and we will show you a bill like the one above being made in seconds.
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