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Buying Gold This Dhanteras? Check Making Charges First Amid High Prices

By Staff
|

Buying gold or other precious metals on the occasion of Dhanteras is considered auspicious in India. This year, Dhanteras falls on 14 November 2020.

However, amid high gold prices, making charges of the jeweller can make a significant difference in the final amount you pay for the article you purchase. You must be aware that every jeweller has a different method of calculating making charges. Some also include wastage within these charges.

 

Calculating this difference before-hand can help you save thousands on your purchase.

Buying Gold This Dhanteras? Check Making Charges First Amid High Prices

How is the ultimate retail price calculated by gold jewellers?

A smart customer always needs to ask for a breakup in the final price from the jeweller, this is because there is no standard invoicing practice among jewellers in India. The billing system will vary from one jeweller to another.

Moreover, cities also have their own jewellery association that decide the rate at which gold would be sold on a particular day.

The final price you pay on your gold article/jewellery = Price of gold (22KT or 18KT) for the day X Weight of the article (in grams) + Making Charges + GST at 3% on the price of gold and making charges

In the case of jewellery studded with stones or gems, the weight of the gold article should be calculated by deducting the weight of stones. It is important to note this because these stones or diamonds are priced separately.

Making charges

Generally, jewellers calculate making charges as:

  • a flat rate per gram
  • as a percentage of the cost of gold jewellery

For example, making charges at Tanishq start at 8%, according to its official website. On the other hand, a 2019 ad from Joyalukkas says that making charges will be Rs 299 per gram.

However, the policies may have changed now.

 

When making charges are flat, the overall rate will differ significantly when compared to percentage-based charges, especially now that gold rates have soared beyond Rs 50,000 per 10 grams.

For example, if you were to buy an article weighing exactly 10 grams at the rate of Rs 50,000, here's how the two different scenarios will play out:

8% making charges

Cost of 10 gram gold (22KT) : Rs 50,000

+ 8% making charges: Rs 4,000

+ 3% GST on Rs 54,000: Rs 1,620

Total price you pay: Rs 55,620

Flat rate

Cost of 10 gram gold (22KT) : Rs 50,000

+ Rs 299 per gram making charges: Rs 2,990

+ 3% GST on Rs 52,990: Rs 1,589.70

Total price you pay: Rs 54,579.70

As you can compare from the above example, the same quantity of gold can have a difference of Rs 1,040.3 in price in two different stores.

Thus, you can pick your choice of store based on their making charges. Sometimes, making charges will vary based on the category of the article, collection, etc. You can make such enquires before you shop.

Other things to note

Gold's purity is measured in Karats, which should not be confused with carat (a measure of the weight of diamond).

24KT gold is the purest form of gold and means all 24 parts of the article is gold (99.9% pure) but since the metal is too soft to be made into jewellery, some part of another metal is mixed with it to form an alloy.

Most popular purity of gold jewellery in India is 22KT, which is 91.6% gold, the other two parts are usually silver or copper or zinc or cadmium.

Based on purity, the price of the gold article will differ depending on parts of gold and the type of metal used to form the alloy.

Check for Hallmarking, which is done by the Bureau of Indian Standards (BIS), to understand the purity of your article before you purchase it.

Story first published: Friday, November 13, 2020, 16:24 [IST]
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