Right from our childhood, to teenage years and adulthood, till the time we have kids or even grandkids, buying gold jewellery is like a tradition in our country.?It holds immense cultural value for many people across India, especially for occasions such as weddings.
But no matter when and for what purpose you purchase gold, it¡¯s always quite an expensive affair, isn't it? That¡¯s why as a buyer, it is very crucial to know how your jewellers are charging you for the jewellery?that you purchase from their store.?
So here¡¯s a guide to help you understand how a jeweller calculates the price of gold jewellery and the factors that affect the calculation of the gold price.
Everyday in the morning, gold traders and retailers work as per the daily gold price set up by the gold jeweler association. As per a?Forbes report, every city has their local gold association that declares gold rates every day.
That is why every city has price differences even for the same weight of the gold item. However, there is only a slight difference in the prices across the cities, as there are other major factors which affect the final price of jewellery items, such as making charges, taxes and purity of gold. That is why it is important to know which formula is used by the jewellers to calculate the final price of jewellery.?
The formula used for gold rate calculation is:?
Final price of the jewellery = Price of gold per gram (22 carat or 18 carat) X (Weight in grams) + making charges/gram + Goods and Services Tax (GST) on (Price of jewellery + making charges).
The below mentioned example can help you understand this calculation better:
For instance, the gold rate quoted by the jeweller is:
Price for 10 grams 22 carat gold = Rs 30,000
Price for 1 gram 22 carat gold= Rs 3,000
Weight of gold item: 20 grams
Making charge= Rs 300/gram
GST= 3% (flat rate)
So, the total price of jewelry would be: Rs 3,000 x 20 gram + (20 gm x Rs 300) = Rs 66,000
When you apply GST @ 3% on this total price, you get:
Rs 66,000 + 3% = Rs 67,980.
Therefore, you need to pay Rs 67,980 for this jewelry purchase.
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Purity: The purity of gold is measured in carats. In gold, 24 carat is considered as the purest form. However, 24 carat is not considered as useful for making jewellery. Generally, 18 carat and 22 carat is used for jewelry making. The higher the purity the more expensive the jewellery becomes.
Making Charges: Making charges are not the same for every jeweller. Generally, making charges vary from 8% to 35% of the total gold rate. Buyers purchasing jewellery always have the opportunity to bargain big on the making charges which can further change the final price of gold jewelry, the Forbes report mentioned.
Studded Jewellery: At times the gold jewellery is studded with precious gemstones. When you purchase it, the main price of gold will change if the price is measured weight-wise. One should deduct the price of the stone or gem from the total price of the, so that they can easily find the actual gold price. The cost of gemstones should be added or disclosed separately.
Gold Pricing: Gold is a tradable commodity, and thus its pricing fluctuates on an everyday basis depending upon the demand and supply and other factors. The national gold rates are published every day in newspapers and on various news-based websites. But, the local jeweller¡¯s gold rate also differs as it totally depends upon from whom they are purchasing the gold and at what price.?
However, the main pricing of the gold would be charged the same or with slight difference only. The above-mentioned factors generally contribute more to the final calculation of gold jewellery items.
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While going jewellery shopping, you will find that every shop has?different pricing attached to the gold jewellery. Even when the rate of gold is same as per its purity (in carat) and weight (in grams), there is still no standard pricing for every gold item in the market. That is where its important to remember and understand the above mentioned factors that impact your gold price and calculation.
As we mentioned, gold traders and retailers work as per the daily price set up by the gold jeweller association every morning. Every city has their local gold association that declares gold rates every day.?That is why every city has price differences even for the same weight of the gold item.?
Also, did you know, Kerala this year became the country's first state to introduce a uniform gold rate? Read about it here.
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