Buying 24K coins online to exchange for 22K jewellery later: does it pay?

How the plan works

1. Buy 24K gold coins (hallmarked 999 or 995) online, a few grams at a time.
2. Later, take them to a jeweller and exchange them for 22K jewellery (hallmarked 916, which is 91.6% gold).
3. The jeweller values the coins' gold and sets it against the new jewellery. You pay making charges, GST and any difference.

What you gain

• You buy gold over time, at each month's price, instead of all at once.
• Certain purity: hallmarked 24K coins are easy for any jeweller to test and value.
• Freedom to choose: unlike a jeweller's scheme, you aren't tied to one shop, or to a 10–11 month window.
• It's yours: you hold the gold, not a scheme balance at a jeweller.

What it costs you

• GST twice. 3% when you buy the coins, and GST again on the new jewellery. The GST on the coins doesn't come back.
• Coin premium. Coins are usually sold above the day's gold rate, to cover minting, packing and delivery. It varies by seller.
• Exchange deduction. Many jewellers deduct something for testing or melting, and some give less for coins they didn't sell. Ask first.
• Making charges still apply on the new jewellery. Coins don't reduce them.
• Tax on the exchange. Exchanging coins is a sale. If their value rose, the gain is taxed: at your slab rate if held 24 months or less, at 12.5% after that.
• Storage until you exchange them.

Example

All figures are assumptions for illustration: a 24K rate of ₹14,000 a gram when buying and ₹14,500 when exchanging, a 4% coin premium and a 1% exchange deduction. Yours will differ.

	Amount
10 g of coins: ₹14,000 × 10 + 4% premium	₹1,45,600
GST at 3% on the coins	₹4,368
You've paid	₹1,49,968
Exchange value later: ₹14,500 × 10, less 1%	₹1,43,550
Capital gain for tax (₹1,43,550 − ₹1,49,968)	A loss of ₹6,418: no tax

Even with gold up 3.6%, the coins are worth less than you paid, because the premium, the GST and the deduction cost about 8%. Gold has to rise by more than that before the plan beats simply saving the money and buying jewellery directly at the same later price. If gold rises a lot, the plan wins; if it falls or stays flat, it loses.

Compared with other ways to save for jewellery

	Coins, then exchange	Jeweller's scheme	Save in an RD, buy later
Protects against rising gold prices	Yes	Mostly no (billed at the rate on the day you buy), with some exceptions	No
Extra costs	GST twice, coin premium, exchange deduction	None up front	None; tax on RD interest
Benefit on making charges	No	Often yes	No
Tied to one jeweller	No	Yes	No
If gold falls	You lose value	You pay less on the day	You pay less on the day

See the brand-by-brand jeweller scheme comparison.

If you go ahead

1. Buy only BIS-hallmarked 24K coins, and keep every invoice.
2. Compare the coin price with the day's gold rate: that gap is the premium.
3. Before exchanging, ask the jeweller for the exchange rate and deductions in writing.
4. Ask how GST is worked out on the new jewellery when you exchange.
5. Count the months: exchanging after 24 months means 12.5% on any gain instead of your slab rate.

This explains how the plan works and what it costs. It isn't advice on whether to buy gold.

Common questions

Two ways to sort this

Do it yourself

1. Buy hallmarked 24K coins and keep the invoices.
2. Note the premium over the day's gold rate on each purchase.
3. Get the jeweller's exchange rate and deductions in writing.
4. Work out the tax on the exchange with our gold tax calculator.

Let an expert do it

We work out the gain on coins you exchange and report it correctly in your return.

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