The tax is the difference between the rate and the bill

The goods and services tax on a gold purchase is charged at a rate of three per cent. It is charged on the finished piece, which means it is charged on the metal value plus the making charge. The benchmark is published before tax, so the advertised rate and the billed amount are two different numbers.

What the tax is charged on

The goods and services tax is charged on the finished piece. That means it is charged on the metal value plus the making charge. The benchmark is published before tax, so the tax is added on top of the benchmark and any making charge.

A buyer who sees a rate advertised is seeing a pre-tax number. The bill will include the tax, and the total will be higher than the rate times the weight. The tax is a separate line on the bill, and it is labelled as such.

Why the benchmark is published before tax

The association's rates are published before tax. That is because the benchmark is a reference for the metal, not for the finished piece. The tax is a government levy, and it is applied at the point of sale.

The benchmark is used for tax purposes, but the tax itself is not included in the benchmark. A buyer who compares a shop's price to the benchmark is comparing a pre-tax number to a pre-tax number. The tax is a separate addition.

The advertised rate and the billed amount are two different numbers

A shop may advertise a rate that is the benchmark plus a small premium. But the billed amount will be higher, because the tax is added on top. The tax is three per cent of the finished piece, which includes the making charge.

A buyer who does not account for the tax will be surprised at the counter. The tax is not a hidden charge; it is a legal requirement. But it is not in the advertised rate, and it is not in the benchmark.

The tax on a piece of jewellery

For a piece of jewellery, the tax is charged on the metal value plus the making charge. That means the tax is higher for a piece with a high making charge than for a piece with a low making charge, even if the metal value is the same.

A buyer should ask for the making charge to be itemised, because the tax is calculated on it. A shop that does not itemise the making charge is making it hard to check the tax.

The tax on a bar or a coin

For a bar or a coin, the tax is charged on the metal value plus any premium. The premium is the amount over the benchmark that the seller charges. The tax is three per cent of that total.

A buyer of a bar or a coin should know that the tax is included in the price, but it is not the same as the benchmark. The benchmark is the metal value, and the tax is on top.

The tax in one sentence

The goods and services tax on a gold purchase is three per cent of the finished piece, including the making charge. The benchmark is published before tax, so the advertised rate and the billed amount are two different numbers.