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Explained: 71% paid 10-20% more for hallmarked gold jewellery in last 1 yr

While hallmarking awareness is increasing, a significant portion (27%) is still buying non-hallmarked jewellery.

gold price

Sunainaa Chadha NEW DELHI
Seventy one per cent of those who bought hallmarked gold jewellery in the last 12 months  reported paying 10% or more extra, revealed a survey conducted by LocalCircles.

 This could be due to jewellers levying additional charges or a lack of consumer knowledge about the true hallmarking cost.

What is hallmarking?
Hallmarking is a system put in place to prevent you from getting cheated when buying gold or silver jewelry (and other items).

Here's how it works:

Assurance of purity: Every piece of hallmarked gold or silver has a tiny mark stamped on it. This mark shows the exact percentage of pure gold or silver present in the item. For example, a hallmark might say "22K" which means 22 parts out of 24 parts of the metal are gold.

Protection from cheating: In the past, people relied on the jeweler's word about the purity of gold or silver they were buying. This could lead to situations where jewelers might sell you something that wasn't as pure as they claimed. Hallmarking eliminates this risk because the purity is clearly marked on the item itself.

Phased implementation: The Bureau of Indian Standards (BIS) is gradually making hallmarking mandatory across the country. This allows them to ensure there are enough facilities available to properly test (assay) the gold or silver before it's hallmarked. The ultimate goal is to have mandatory hallmarking in all 766 districts of India.

Unique Identification: Each hallmark also includes a unique six-digit alphanumeric code. This code acts like a fingerprint for the specific piece of gold or silver. It helps track the item and provides additional security.

Purity of gold sold has always been of concern for household consumers in India
 Across the country, a common consumer complaint was about being charged for 22 carat gold jewellery whereas in reality it was just 18 carat gold and many finding that out when they tried to remake or sell it. With buying of gold largely being done by consumers in cash, reporting the fraud to local police meant creating more problems than getting redressal.

Hallmarking helps people know what they are buying and pay accordingly
The six-digit HUID number is unique to each piece of gold. It avoids mis-selling, guarantees quality, and helps in tracing the item to the maker, whether handcrafted or machine made. The hallmarking is not done by the jewelers but by BIS recognized Assaying and Hallmarking Centres. The government has been stressing that hallmarking only adds marginally to the cost  but it gives indication of the purity of gold coin, jewellery or other artefacts whether 22 carat or lower carats. Each piece also bears jeweler’s identification and the year of marking. This helps consumers make an informed decision.

The hallmarking cost was earlier Rs 25, which has now been increased to Rs 45. But most jewellers build in the price.

While hallmarking awareness is increasing, 27 per cent of respondents still said that they are  buying non-hallmarked jewelry. Even in districts where hallmarking is mandatory, some jewelers seem to be flouting the rules, as indicated by the 27% who bought non-hallmarked pieces in those areas.

GST and gold jewelry:

Buying gold jewelry involves two taxes:
3% GST on the gold value: This is a fixed tax based on the weight of the gold itself.
5% GST on making charges: This tax applies to the labor cost involved in crafting the jewelry.
The hallmarking cost, mentioned earlier, is minimal compared to GST.

Importance of GST Receipts:
The survey asked if people received a GST receipt when buying gold jewelry in the past year.
86% said yes: This is a good sign, as receipts are crucial for several reasons:
Taxation: Receipts help the government track taxes paid.
Consumer Protection: Receipts serve as proof of purchase in case of any issues with the jewelry's quality or authenticity. They are essential for seeking redressal (compensation or resolving the issue) if the jewelry isn't as promised.
14% did not get a receipt: This raises concerns. Some reasons people might avoid receipts include:
Cash Transactions: Some might pay in cash to avoid taxes, but this eliminates the record of the purchase.
Avoiding GST: Some might try to avoid paying GST altogether, but this is illegal.

Why you should not skip the GST receipt 
Skipping the GST receipt can have negative consequences for consumers. Without a receipt, it becomes difficult to prove the quality or authenticity of the jewelry if there's a problem later. This weakens their position if they need to get a refund or exchange.

"It is clear that consumers need to be educated more about the costs involved in hallmarking and that there should be no extra charges. Without this information many consumers may continue to flock to their “reliable” goldsmith to buy gold jewellery sans hallmark. Some of the local goldsmiths may not even be registered, and outside the GST purview. As it is 14% of those surveyed indicated that they did not take the GST receipt when buying gold articles. The survey also reveals that despite the government striving to protect the consumers and spread awareness, only 64% of those who bought gold jewellery in the last 12 months bought hallmarked articles," noted Local Circles in a note.

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First Published: May 10 2024 | 8:36 AM IST

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