“Karat” is the internationally recognized term used to denote the purity and weight of gold. Higher the Karat, better the purity of gold.
1) 24 Karat: 24 Karat gold is the purest and most expensive form of gold found in the market. Owing to it’s pliability 24-Karat gold is not usually used to make jewellery and is instead used for investment purposes, in the form of coins or bars.
2) 22 Karat: 22 Karat gold is generally used in the jewellery industry. In this type, pure gold is mixed with several alloys like zinc, nickel, or silver to make the gold harder and fit for jewellery. Generally, 22 Karat gold is 91.67% pure.
3)18 Karat: 18 Karat gold is the gold that is prepared by mixing 75% gold with 25% other alloys. 18 Karat gold is the cheapest type of gold available in the market.
Gold is universally acknowledged as a valuable commodity pertaining to its unique properties, such as:
Gold is available in limited quantities. The best estimates suggest that about 197,576 tonnes of gold have been mined throughout history. In fact, if every ounce of this gold is arranged in a cube, each side of this cube will only measure about 21 metres.
The price of gold tends to rise over time. This is because its demand is exceedingly high in countries India, but the supply is limited.
Gold is a highly liquid, non-consumable asset. Additionally, this metal retains an active market at almost all times. So, individuals can easily convert their gold to cash whenever they want.
It impacts economies in terms of contribution to foreign exchange and trade balance. Furthermore, gold is used as a reserve to hedge against inflation in most free-market economies globally.
When it comes to buying gold for jewellery or investment purposes, people often get confused about the purity and quality of the gold. The two most commonly confused types of gold are KDM gold and hallmark gold. KDM gold refers to the gold that is made by mixing cadmium with gold, where gold is 92% and cadmium 8%. This brings down the gold's purity level to 92%. However, of late, the production of KDM gold has stopped, due to the associated health risks. Hallmark gold is gold certified by the Bureau of Indian Standards. The test is conducted at the assaying centres approved by the BIS. Hallmark gold is available in four varieties:
Higher the carat, better the purity. Hence, depending on how you plan to use the gold, you may select the carat.
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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