'Karat' represents the proportion of gold present in an alloy. It indicates the fineness of gold, which implies that the higher the karat, the more the purity of gold.
Gold has always been one of the most significant investment options for Indians. The high liquidity of gold and its consistent value makes it a popular option for investment purposes. It also acts as a hedge against fluctuations in the market. Gold can either be pledged in the form of a gold loan or it can be sold to meet urgent financial deficits. It pays to be aware of the value of gold to prevent unscrupulous activities by the lenders or jewelers. It is not very complicated to calculate the value of the gold. The weight and the purity of the gold will have to be tested at an assaying laboratory. There are two methods to calculate the purity of the gold. It can be denoted in percentage or in karat.
The purity of the gold and the quality of the gold are two different factors that people often get confused over. Hallmark gold and KDM gold are the two types of gold that usually leads to some confusion. The two types of gold are considerably different with regards to their composition. The KDM gold has a purity level of 92%, where the gold is a mixture of 8% of cadmium and 92% of gold. Since there are some health risks associated with KDM gold, it is no longer in sale in the market. On the other hand, Hallmark gold has a certification by the Bureau of Indian Standards. The Hallmark gold is testes in assaying centers approved by the BIS. There are four varieties of hallmark gold: 23 karat, 22 karat, 21 karat and 18 karat. The purity of the gold is directly proportional to the karat rate. The higher the karat rate, the higher the purity.
Goods and Services Tax has unified the earlier payable taxes like Value Added Tax (VAT), Customs duty, Central Excise duty, etc., and the whole indirect tax structure has been brought under one umbrella.
GST on gold is levied when individuals opt for buying gold jewellery or bars. Individuals need to pay several taxes depending on the various processes involved in gold trading, manufacturing, and purchasing. To be precise, individuals need to pay GST of 5% on making charges, 10% on import duty and 3% on gold. However, the GST on making charges is a product of the new tax regime.
The new tax structure and implementation of several taxes have made gold expensive by 0.75%. Apart from the impact on gold prices, GST has stretched its effects on gold imports as well as across the organised and unorganised sectors, which are invariably linked with the increasing price of gold.
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