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If you’re planning to buy gold this Diwali, it’s crucial to understand how the price of your jewellery is determined.
Jewellery prices are influenced by several factors, primarily the cost of gold and the carat of the metal.
As the festival of Diwali is celebrated with enthusiasm across the country, many consider it an auspicious occasion to purchase gold. This traditional practice holds significant cultural importance, but prospective buyers must be well-informed to avoid potential pitfalls during this festive season.
If you’re planning to buy gold this Diwali, it’s crucial to understand how the price of your jewellery is determined. Many buyers unknowingly fall victim to misinformation, so being aware of the pricing structure can help you make informed decisions.
Jewellery prices are influenced by several factors, primarily the cost of gold and the carat of the metal. The most common carats used in jewellery are 18 carat and 22 carat. While 24 carat gold is considered pure, it is not typically used for making jewellery due to its softness.
The formula that jewellers commonly use to calculate the price of gold jewellery involves several components. The final amount is determined by multiplying the current gold rate by the weight of the jewellery, adding the making charge, and then applying additional costs such as a 3% GST and a hallmarking fee.
To illustrate how this works, let’s consider an example. If the current price of 22 carat gold is Rs 70,000 per 10 grams, and you are looking to purchase a piece weighing 20 grams, the initial cost would be calculated by determining the price for the 20 grams, which amounts to Rs 1,40,000.
Next, a making charge – typically around 15% of the jewellery’s gold price – would be added. In this scenario, that would be Rs 21,000, bringing the total before taxes to Rs 1,61,000. After applying the 3% GST, which adds approximately Rs 4,830, the total rises to Rs 1,65,830. Finally, including a hallmarking fee of Rs 45 results in a final cost of approximately Rs 1,65,875 for the 20 grams of jewellery.
As you embark on your gold-buying journey this Diwali, keeping these calculations in mind will help you navigate the purchasing process with confidence.
