Verify Purity and Hallmarking
Before anything else, understand the purity of the gold you are exchanging. Purity is measured in karats (K), with 24K being the purest form. Most Indian jewellery is made of 22K gold, which is 91.6% pure gold. Look for the Bureau of Indian Standards
(BIS) hallmark, which certifies the gold's purity. Since 2026, the mandatory BIS hallmark consists of three marks: the BIS logo, the purity grade (e.g., 22K916), and a six-digit alphanumeric Hallmark Unique Identification (HUID) number. You can verify this HUID using the BIS CARE app. If your jewellery is not hallmarked, which is common for older pieces, the jeweller will need to test it to determine its purity, often by melting it down. This is a standard industry practice, though hallmarked jewellery avoids this step.
Understand the Valuation Formula
The value of your old gold is not random; it's based on a clear formula: Net Gold Weight (in grams) x Purity (%) x Current Gold Rate. The jeweller will first weigh your ornament on a digital scale, which should be done in front of you for transparency. It's crucial to note that this is the net weight of the gold. Any embedded stones like diamonds, pearls, or enamel work are not included. Their weight will be deducted from the total, or the stones will be removed before weighing. The day's gold rate is the final component, but remember that the buying rate for old gold may be slightly lower than the selling rate for new gold.
Clarify All Deductions
This is where many customers lose value. After calculating the gross value of your old gold, jewellers will apply certain deductions. The most common are melting or refining charges, which cover the cost of turning the old ornament back into pure, usable gold. These charges typically range from 1% to 3% of the gold's value. Some jewellers may quote a higher blanket 'melting loss' or 'wastage' fee, sometimes as high as 10-15%, especially for non-hallmarked items where purity is uncertain. Always ask for a clear, itemised breakdown of all deductions before you agree to the exchange. Question any vague 'processing' or 'handling' fees.
Scrutinise Making Charges on New Jewellery
Making charges are a significant part of the cost of new jewellery and are completely separate from the exchange process of your old gold. These charges cover the craftsmanship and design of the new piece you are buying and can range from 8% to over 25% of the new item's gold value. Remember, you never get back the making charges you paid for your old jewellery. When buying the new piece, these charges are often negotiable, especially on simpler designs or during festive seasons. Don't hesitate to ask if the making charge is a percentage or a flat rate per gram, and always try to negotiate for a better deal.
Insist on a Detailed Bill
A transparent transaction ends with a detailed bill. Whether you are exchanging or buying, the invoice is your proof of purchase and essential for any future transactions. The bill should clearly list separate line items for the valuation of your old gold, any deductions made, the price of the new gold (weight, purity, and rate), the making charges for the new piece, the value of any gemstones, and the final Goods and Services Tax (GST) applied. For new hallmarked jewellery, ensure the HUID number is also mentioned on the invoice. This document is your ultimate protection as a consumer.
Compare Offers from Multiple Jewellers
Exchange policies, deduction percentages, and making charges can vary significantly from one jeweller to another. Don't feel pressured to accept the first offer you receive. It is always wise to visit at least two or three trusted and reputable jewellers to compare their exchange terms. This is especially important if you are exchanging a large quantity of gold or high-value pieces. A little comparison shopping can lead to substantial savings and ensures you are getting the most competitive and fair value for your old assets before you make that special festive purchase.
