Understanding Gold Purity
The first step in buying gold is understanding its purity, which is measured in karats (K). The higher the karat, the purer the gold. 24K gold is the purest form, containing 99.9% gold, but it's too soft for most jewellery. This makes it ideal for investment
in the form of coins or bars. For jewellery, 22K gold is the most popular choice in India, containing 91.6% gold mixed with alloys like copper or silver to enhance durability. 18K gold, with 75% pure gold, is often used for diamond-studded and intricate pieces as it is even more durable.
The Importance of Hallmarking
To guarantee purity, always look for the Bureau of Indian Standards (BIS) hallmark. Since April 1, 2023, it has been mandatory for jewellers in India to sell only hallmarked gold jewellery. Every hallmarked piece now comes with a six-digit alphanumeric Hallmark Unique Identification (HUID) number. This code is a digital passport for your jewellery; you can verify its authenticity, including the jeweller's details and the exact purity, using the BIS CARE mobile app. This system ensures that you are not sold under-karat gold at a higher price.
Decoding the Final Price
The price you see online is never the final price you pay at the store. The total cost of gold jewellery is calculated as: (Price of gold per gram × weight of the item) + Making Charges + 3% Goods and Services Tax (GST). The gold rate fluctuates daily, so always check the current day's rate for 22K or 18K gold. The final price you pay will be based on the gold value plus making charges, with GST applied to this total amount.
Don't Forget Making Charges
Making charges are the labour costs involved in crafting the jewellery. These are not fixed and can vary significantly from one jeweller to another, typically ranging from 8% to 25% of the gold's value. Intricately designed, handmade pieces will have higher making charges than simpler, machine-made items. This is the most negotiable part of your gold bill. Always ask how the charge is calculated—whether it’s a flat rate per gram or a percentage of the total value—and don't hesitate to bargain, especially during festive seasons when jewellers may offer discounts.
Define Your Buying Purpose
Your reason for buying gold should guide your purchase. If you are buying for ornamental or cultural purposes, 22K jewellery is a perfect blend of richness and durability. However, if your primary goal is investment, gold jewellery is not the most efficient choice because making charges and GST are non-recoverable costs when you sell. For pure investment, 24K gold coins or bars are far better as they have minimal to no making charges and thus offer a higher resale value. An increasing number of buyers in India are now choosing bullion over jewellery for long-term savings.
Smart Buying and Resale Tips
Always purchase from a reputable jeweller who provides a detailed bill that breaks down the gold weight, karat, HUID, making charges, and GST. This invoice is crucial for any future buy-back or exchange. Before buying, inquire about the jeweller's buy-back policy. Most jewellers will buy back their own jewellery, but the terms can differ. Typically, they will refund the value based on the current gold rate for the net weight of the gold, but they will not refund the making charges or GST you originally paid.
