Guide to Buying Gold Jewellery in India

Planning to buy gold in India? Don't compromise on the Quality or Cost of your Gold Jewellery. Make sure you are not cheated, when you buy gold jewellery next time. Here is a guide to buying gold jewellery in India…

Do you know gold ornaments are made with 24K gold or 22K gold ?

What is 24K, 22K Gold?

Karat is a measure of the purity of gold. The purest form of Gold 24 karats is equal to roughly 99.9% purity.

As pure gold is very soft, it is not possible to make any jewellery out of it. Metals such as copper, silver, cadmium are added to pure gold to make it strong, shine and with the desired shade. Based on how much extra metals are added, the Karat value of the gold reduces to 22Kt, 18Kt or 14Kt.

22K gold is most popular in India. 22Kt gold jewellery means it has 22/24 percent pure gold in it or in other words 91.6% purity. 22K gold is also called 916 gold.

18K gold has 18 parts gold and 6 parts of one or more additional metals, making it 75 percent gold. Nowadays, most ornaments are made with 18K gold as it is relatively more durable against daily wear and tear, especially if it is studded with diamonds or gemstones.

What is 916 KDM?

A 22K gold soldered with cadmium is called 916 KDM. If KDM is stamped onto the gold, it means that Kadmium Monaxide was used to connect some of the piece of jewellery.

What is BIS Hallmark?

The BIS hallmark is a hallmarking system for gold as well as silver jewellery sold in India certifying to the purity of the metal. A hallmark consists of five components -- logo of BIS, the fineness number corresponding to the gold content in the jewellery (ex: 958, 916, 875, 750, 585, 375), mark of BIS recognized Assay and Hallmarking Centre which certifies the quality, identification mark of the BIS certified jeweller, and the year of manufacture, denoted by a code letter (Starting with A for 2000, B for 2001..O for 2014). Check the picture below for more details.

What is the cost of Gold Jewellery?

Prices of gold jewellery are decided according to the purity of the gold. Gold price changes every day and 24K gold price is what commonly available in market.   

Price of 22K gold is computed as = Price of 22K *22/24

Price of 18K gold is computed as = Price of 24K *18/24

On top of the cost of the gold we have to pay for wastage charges, making charges and VAT.

Wastage Charges:

Wastage is nothing but scrap, same as in other materials. Some years ago, Goldsmith charged up to 30% as wastage while manufacturing ornaments. Now a days, the technology has developed and recycling is done to reduce the wastage to less than 1 %. But the Jewellers are still following the old tradition to earn money. For the pure gold items the wastage is around 6-13%, whereas for diamond jewellery it goes upto 15%-25% of pure gold.

Wastage charge is the component to be targeted to save a good amount of money on your gold purchases.

Making Charges:

Making charges are what a consumer pays above the price of gold(on a certain day) for crafting the gold into jewellery. This varies from item(viz. bangles) to item(viz. chains) and from one jeweller to another.

Cost of Gold Jewellery = Making Charges + Wastage Charges + Cost of Stones, if any + VAT

For example, assume that the gold rate is at Rs.2500/- per gram for 22 Karat gold. When you buy a 10 gram gold chain with the making charges at 35 rupees per gram and wastage charges at 12%, the following will be the calculation to arrive at the final price:

(1) Cost of gold alone = 10 * 2500 = 25,000/-

(2) Making charges   = 10 * 35 = 350/-

(3) Wastage charges = 12 * 25,000 / 100 = 3,000/-

The total cost before VAT = 28,350/-

If the VAT is at 1% that becomes 28,633.50/-

Sometimes there is a trick in special offers like “Reduced making charges” or “Rs 100 less per gram gold”. “Reduced making charges” could mean the jewellery is not hallmarked or you have to pay for 24K gold rate instead of 22K. “Reduced gold price per gram” could mean higher making charges or non-hallmarked jewellery. In such cases, we may end up paying the same amount with or without special offers.

Tips:

1. Always buy BIS hallmarked gold jewellery. Check for the BIS hallmark on the inner or back side of each of the pieces you are buying. Hallmarking does not cost you any extra money.

2. Make sure to weigh each of the pieces separately.

3. Make sure you pay only for the purity of the Jewellery not always for 22K gold. I mean don’t pay 22K gold price for 18K gold. Get the latest gold prices for 24k and 22k here.

4. Negotiate to reduce the wastage charges to 8 - 12 %. Wastage may be more depending on the design.

5. Make sure to get the full price when you are exchanging 22K gold jewellery. Don’t pay any melting or usage charges for exchanging gold. Exchange rate for stones may be lower.

Don't compromise on the Quality or Cost of your Gold Jewellery.

Read an an interesting article Buying Gold Jewellery? - Know the facts first ! from Premkumar Masilamani.

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