How much less than the market rate will I get for old gold?

You are paid for gold content at the prevailing rate, less deductions for purity, non-gold weight such as stones, and refining loss. What you do not recover is the making charges and GST you paid originally, which on a typical purchase were 15–20% of the price.

Do I pay GST when I sell my gold?

An individual selling their own jewellery does not bear GST on that sale. If you exchange old gold for new, the gold you hand over is not a taxable sale by you. GST applies to the new piece.

Is there tax on the profit when I sell gold?

Yes, capital gains tax. Held more than 24 months, the gain is long-term and taxed at a flat 12.5% with no indexation. Held 24 months or less, the gain is added to your income and taxed at your slab rate.

Do making charges count when working out my gain?

Yes. Your cost of acquisition includes what you paid for the metal plus the making charges and GST on the original purchase. Keep the invoice, because it lowers the taxable gain.

Is exchanging better than selling for cash?

Exchange usually gets you a better headline valuation, because the jeweller recovers the difference on the new piece you buy. It is only better value if you were going to buy that piece anyway at a price you have checked independently.

Selling or exchanging old gold

By HouseOfCoder · Last reviewed 7 September 2026

When you sell old gold you are paid for the metal in it, and nothing else. Not the design, not the labour, not the tax you paid at purchase. That single fact explains most of the disappointment at the counter, and it is worth understanding before you walk in rather than after.

The gap, in numbers

Take the 10 gram 22K chain from our making charges guide, bought at 12% making charges. Assume, unrealistically but to isolate the effect, that the gold rate has not moved at all since.

	Amount
You paid	₹1,62,234
Metal value at the same rate	₹1,40,593
After a 2% refining deduction	₹1,37,781
Shortfall	₹24,453 (15.1%)

Around a sixth of the purchase price, gone, with the gold rate unchanged. That is not a jeweller cheating you. It is the making charges, hallmarking and GST you paid, which were never part of the metal. For the sale to break even, the rate has to have risen enough to cover them.

How a jeweller values what you bring in

Purity is tested. Most established shops use an XRF machine, which reads the surface composition without damaging the piece. Smaller shops may use a touchstone, which is cruder and more open to dispute. For a large sale, ask which method is being used.
Non-gold weight is removed. Stones, pearls, enamel and any wax or filler inside hollow pieces are not gold and are not paid for. On a heavy stone-set item this can be a large share of the weight.
A refining or melting loss is applied. Real metal is lost when old jewellery is melted down, and a deduction for it is legitimate.
The prevailing rate is applied to the net gold weight at the assessed purity.

Which deductions are reasonable and which are not

Purity, genuine non-gold weight and a modest refining loss are all defensible. What is not defensible is an unexplained percentage taken off the top with no itemisation, and that, according to consumer reporting on exchange schemes, is common. Deductions are often applied without being broken down.

Ask for the assessed purity, the net gold weight, the rate applied and each deduction, in writing, before you agree. A shop confident in its valuation will provide it. If the figure arrives as a single number with no working, that is the moment to take the piece elsewhere for a second opinion.

Exchange or cash?

Exchange schemes routinely offer a better valuation than a cash sale, sometimes markedly so. The reason is not generosity: the jeweller recovers the difference in the making charges on the new piece you buy with the proceeds.

That makes exchange a good deal only if you were going to buy that piece anyway, and only if you have checked its price independently. A generous valuation on your old chain paired with an inflated making charge on the new one leaves you worse off than a plain cash sale would have. Price the new piece first, with the calculator, and treat the two halves of the transaction as separate deals.

Insist that the invoice shows the exchange value of your old gold and the price of the new piece as separate lines. If they are netted into one figure, neither half is checkable.

GST when you sell

You do not bear GST on selling your own jewellery. You are not a registered dealer making a taxable supply, so the obligation sits with the registered buyer. When you exchange, the gold you hand over is not a taxable sale by you either; GST applies to the new piece you take away. Fuller detail is in GST on gold.

Capital gains tax

Profit on gold is taxable, and the rules changed with the Finance Act 2024 for transfers on or after 23 July 2024.

Held more than 24 months: long-term. Taxed at a flat 12.5% under Section 112, with no indexation. Indexation was removed for all asset classes except land and building.
Held 24 months or less: short-term. The gain is added to your total income and taxed at your slab rate, which can reach 30%.

The part people miss: your cost of acquisition includes the making charges and the GST you paid on the original purchase, not just the metal value. Those charges you never recover at resale do at least reduce your taxable gain, so keep the original invoice. Without it you may end up taxed on a gain larger than the one you actually made.

There is no TDS on a physical gold sale, but the gain is reported by you in Schedule CG of your return, and the transaction can surface in your Annual Information Statement through the buyer’s GST filings.

This is general information, not tax advice, and individual circumstances differ. For a sale of any size, check the position with a qualified professional before you file.

If the reason for selling is that jewellery turned out to be a poor way to hold gold, the alternatives are compared here.

Before you sell

Find the original invoice. It sets your cost base and your purity evidence.
Check today’s rate first: the benchmark is on our homepage.
Get valuations from more than one buyer. They differ more than you would expect.
Ask for the deductions itemised in writing before agreeing to anything.
Weigh the piece yourself beforehand, so you can check the weight you are quoted.

Today’s 22K benchmark is ₹14,059.30 a gram. Use the gold calculator to work out the metal value of what you are holding before anyone quotes you a figure for it.

Common questions

How much less than the market rate will I get for old gold?: You are paid for gold content at the prevailing rate, less deductions for purity, non-gold weight such as stones, and refining loss. What you do not recover is the making charges and GST you paid originally, which on a typical purchase were 15–20% of the price.
Do I pay GST when I sell my gold?: An individual selling their own jewellery does not bear GST on that sale. If you exchange old gold for new, the gold you hand over is not a taxable sale by you. GST applies to the new piece.
Is there tax on the profit when I sell gold?: Yes, capital gains tax. Held more than 24 months, the gain is long-term and taxed at a flat 12.5% with no indexation. Held 24 months or less, the gain is added to your income and taxed at your slab rate.
Do making charges count when working out my gain?: Yes. Your cost of acquisition includes what you paid for the metal plus the making charges and GST on the original purchase. Keep the invoice, because it lowers the taxable gain.
Is exchanging better than selling for cash?: Exchange usually gets you a better headline valuation, because the jeweller recovers the difference on the new piece you buy. It is only better value if you were going to buy that piece anyway at a price you have checked independently.