From making charge to the quality of the gold, you should consider all these aspects while buying the yellow metal. Read on to know more.
Gold investment through jewellery buying is quite popular across the country. It fulfils the dual purposes of value appreciation as an investment and the ability to use the jewellery as an ornament for the long term.
When you invest in gold through an Exchange-Traded Fund (ETF) or Sovereign Gold Bond (SGB) scheme, then the price quoted through such platforms are regulated by specific authorities. However, when you invest in gold jewellery, then you may not get it at the same price everywhere because gold value varies across the country from jeweller to jeweller. There is no specific rule for pricing and invoicing when you buy a gold ornament. Generally, jewellers have city-specific association and pricing. This can lead to the price of gold to vary from city to city.
Therefore, there are some important points that you must keep in mind while buying gold items from the jewellers to protect your interest.
How Price Of Jewellery Is Calculated By Jewellers?
Generally, jewellery prices are calculated based on the prevailing price of gold as per purity, making charge, weight of gold and GST.
Price of jewellery = Gold rate/Gram x Weight of gold in jewellery + Making charge/gram + GST (on Jewellery plus making charge).
For example, suppose gold rate quoted by the jeweller is Rs 30K/10gram (i.e. Rs 3K/gm) for 22 carat gold. The weight of gold in jewellery you purchase= 20 gram and making charge is Rs 300/gram. So, the total price of jewellery would be calculated as, Rs 3K x 20 gram + (20 gm x Rs 300) = Rs 66000 + (Rs 66K x 3%)= Rs 67980.
Things You Must Keep In Mind
Price of gold quoted by the jeweller depends on its quality. For example, if 24 KT gold price is Rs 32K/10 gm, then 22 KT gold will be priced lesser i.e. somewhere around Rs 29,300 to Rs 29500/10 gm. So, when you select a jewellery, then check the price of gold for that quality in the market.
Nowadays jewellery comes embedded with artificial diamond, semi-precious stones, and artificially coloured stones. Such stone also constitute weight of the jewellery that you intend to buy. It is important that jeweller shows the price of the gold and embedded stone separately, and accordingly making charge and tax should be calculated.
Some jewellers consider the gross weight of jewellery as actual weight and calculate the price accordingly. In such a case you may be at a loss due to the wrong calculation.
For example, if, gold (Rs 3K/gm) weight is 20 gm and stone (Rs 20/gm) weight is 1 gram, then jeweller will ask you to pay Rs 3K x 21 gm= Rs 63K. However, the correct calculation would be Rs 3K x 20 gm + (Rs 20 x1 gm) = Rs 60020 (GST as per applicable rate, extra). So, you can save Rs. 2,980 easily by checking the billing method. Here, you would also notice that at the time of buying jewellery, the jeweller uses the aggregate weight of gold and stone, but when you exchange the same jewellery after few years, then the same jeweller will first take out the stone and then take the weight of the ornament. So, it will be a double loss for you.
Making charge is another important aspect that should be kept in mind while buying gold jewellery as it constitutes a substantial portion of your total bill. There are some jewellers who include making charge in the bill at a fixed rate per gram of gold, while others may charge it based on certain percentage of the total jewellery weight.
Making charge makes the whole difference in the price of your jewellery from where you buy it. It requires hard bargaining if you do not want to pay extra money as a making charge. A low making charge can give you the advantage to exchange the jewellery after using for a few years if you are ready to bear the loss to that extent, but if the making charge is high, then you would need to think twice.
You’ll find two types of jewellery in the market, i.e. one would be non-standardised, and the other is standardised as per Bureau of Indian Standards (BIS) which certifies the purity of gold. BIS marked jewellery is sold at a premium, but you can anytime exchange such gold jewellery at any jewel by bearing a small quality margin or at the same jeweller at prevailing market rates of gold.
When you buy gold for both jewellery and investment purpose, then you should consider metal with high purity and BIS mark. You should avoid a stone embedded jewellery if you are buying it for investment purpose as the price of low-quality stone will not give you any return in the long term in comparison to a pure gold jewellery.