Gold Jewellery Buying Tips: Wastage Charges, Making Charges, VA, Karat, 916 and more…

9 Aug



Planning to buy some Gold jewellery in India and confused about how the whole thing works? Well, I was equally puzzled by all those terminologies and promises that you get to hear in Jewellery shop commercials until I decided to dig out some information.

So here’re some tips and education that might help you in the future.

What is Karat, 916, BIS Hallmark etc?

Karat (NOT Carat) is a measure of the purity of gold. 24 carat is considered pure gold.

Since pure gold is too soft (and hence would easily bend) to make any jewellery out of it, there has to be certain other metals such as copper, silver, cadmium etc added to make it strong, shine and with the desired shade. Based on how much extra metals are added, the Karat value of the gold reduces to 22Kt, 18Kt, 14Kt or even 10Kt.

For example, 18K gold is 75% pure gold (i.e. 18/24) where as 14K gold has only 58% real gold in it.

In India, 22K gold is considered the most valuable for jewelleries and hence it has more resale value as well. 22Kt gold jewellery means it has 22/24 percent pure gold in it or in other words 91.6% purity.

And this is what is called 916 gold (symbolizes 91.6%).

BIS Hallmark Symbol

BIS Hallmark Symbol

In order to make sure that the jewellers actually sell 91.6% pure gold (when they claim to sell 22Kt gold), the Bureau of Indian Standards (BIS) made it mandatory to emboss a hallmark on all standardized gold jewellery. And such a jewellery is known as a BIS Hallmark jewellery. Before this standardization, many jewellers and goldsmiths used to cheat people with below 22Kt gold while they claimed to sell good quality 22K gold. I figured this out while selling some old gold jewellery recently.

[BIS Hallmark is NOT just for 22Kt gold. You may take a look at the BIS site for all BIS components]

Making Charges, Gold Wastage charges etc

As I mentioned earlier, there has to be certain metals added to pure gold to make it tough and good enough to make jewellery. This is the first level of added cost to the making process followed by the actual making charges to convert the gold bars or blocks into beautiful jewellery patterns.

The making charges (‘Panikkooli’ for Malayali friends) is the cost of converting raw gold into jewellery. This is usually expressed in Rupees per gram of gold. In most cases, the making charges per gram of gold vary from 25 to 35 rupees. Compared to the price of gold today, this is a negligible number.

However, there is another scary number called the ‘wastage charges’ (‘Panikkuravu’ as Keralites call it). In the good old times, the goldsmiths used to make gold jewellery by melting gold, cutting and shaping it into tiny pieces and join them together to make great handmade gold jewellery. In this process they ‘claimed’ that certain quantity of gold go wasted though these goldsmiths are actually smart enough to collect or retrieve most of the gold without wasting any. Nowadays, the gold ornaments are made in advanced machines and nothing really go wasted. However, this tradition of calculating ‘wastage’ continues and this is expressed in terms of ‘percentage’and they charge that to the customers.

The amount charged to the customers for the ‘wastage’ caused is known as the ‘wastage charges’. It’s quite ridiculous that there’s no norm for this wastage charge component and that’s exactly where your jeweller cheats you. The wastage charges typically vary from 10% to 18% in most shops while it’s quite possible to have it as high as 20% or 24% or even as low as 8%. Unfortunately, nobody knows why certain ornaments has to have more wastage than some others as claimed by the jeweller.

Hence the actual cost burden on you while purchasing gold jewellery is:

Actual cost of gold as per the day’s rate + Wastage charges + Making Charges + VAT if any. In addition, if your jewellery has any precious stones, that cost will be added up as well.

Cost of Gold Jewellery = Making Charges + Wastage Charges + Cost of Stones, if any + VAT

For example, assume that the gold rate is at Rs.2500/- per gram for 22 Karat gold. When you buy a 10 gram gold chain with the making charges at 35 rupees per gram and wastage charges at 12%, the following will be the calculation to arrive at the final price:

(1) Cost of gold alone = 10 * 2500 = 25,000/-

(2) Making charges = 10 * 35 = 350/-

(3) Wastage charges = 12 * 25,000 / 100 = 3,000/-

The total cost before VAT = 28,350/-

If the VAT is at 1% that becomes 28,633.50/-

Recently the jewellers have started representing the Wastage Charges and Making charges together as VA or ‘Value Addition’.

Gold Jewellery buying tips for Indians

As a smart buyer, you may keep the following things in mind when you deal with jewellery shops.

  • First, if you are exchanging gold (selling old ornaments and buying new) make sure that you are getting the full price of what you are selling. i.e. As long as you are selling 22K gold, the shop may not reduce any price but give you the actual market price of the 22K gold by its weight. There are some jewellers who charge melting charges, handling charges or whatever they may call it but never ever fall into that trap
  • Each and every piece has to be weighed separately and tested for purity using the electronic purity tester while selling. i.e. if you have a pair of ear rings, test them separately
  • Ask for the current gold price on your purchase day and their standard making charges before commencing your shopping
  • Check for the BIS hallmark on the inner or back side of each of the pieces you are buying
  • Ask for the ‘wastage charges’ for each of the pieces that you are picking and be prepared for the negotiation
  • You may start by asking the ‘BEST wastage charge’ as per the salesman. Negotiate with him and tell him that you are serious about the purchase if he’s forthcoming in terms of a reduced rate. He will mostly give one percent less. Take it to the store manager or supervisor at the next level to get 2-3% negotiation done. You WILL definitely get 2-3% discount if you are making bigger purchases. If you are gone there just to pick a little 2gm earring or so, you better not negotiate much. But if you are on wedding or engagement shopping, you may save a lot by negotiating


Further tips:
There may be some sales people who may try to belittle you on your miserliness and even might raise their voice. You may remind such people that you know this business and it’s your money that is at stake. Further, you may ask them why there’s no norm for this so-called wastage charges (Hopefully at some point the government will normalize this as well).

Most jewellers may offer you a discount of 40 or 50 rupees per gram on the prevailing rate as if they are doing you a great favour. Please note that your REAL saving comes from the wastage charge negotiation. The ’special discount valid only for today’, or ‘pick a chit and get your lucky discount’ etc are the gimmicks that they play to preempt further negotiation. Don’t fall for those tricks.

You may advise your respective wives to stop exchanging jewellery too often. Because, every time you exchange, all those value addition charges come into play and you lose a lot of money.

If investment is your goal, avoid buying jewellery but go for gold coins or even Exchange Traded Funds on Gold (ETF Gold Funds).

That’s pretty much for now. I just thought of jotting down these points after coming back from a minor purchase at Chemmanur Jewellers – not that I was hugely successful in negotiating this time. But I have certainly seen my relatives, in-laws, friends etc negotiating big time and making a huge difference in the final bill.

87 Responses to “Gold Jewellery Buying Tips: Wastage Charges, Making Charges, VA, Karat, 916 and more…”

  1. Bijulal 02. Sep, 2012 at 12:01 pm #

    I didn’t know that pure gold is soft. Really? I’m learning a lot from your article. Very well written and educational. And lol panikkuravu and panikkooli…

    • Lakshmi 20. Jan, 2014 at 4:00 pm #

      Bijulal, had u listened to the metals section of ur chemistry classes in higher secondary, theyw ould have taught u this. It is not exactly “soft”. It is called brittle or rather, they say gold in pure form is not malelable & ductile.

  2. Kannan 04. Jan, 2013 at 4:25 pm #

    Very very useful to me….
    tnk u so much.

  3. jagadeesh 24. Jan, 2013 at 5:36 pm #

    Really useful.

  4. Pratima P 16. May, 2013 at 11:18 am #

    It was very much useful to me.. Thanks a lot. I had one doubt that, what is 24kt. gold? I heard this very frequently? Kindly answer to me..

    • Ajith Prasad Edassery 16. May, 2013 at 12:08 pm #

      24Kt (24 carat or carrot) gold is the gold in its purest form. This is usually the best buy for investments, however, 24 carrot gold cannot be used to make jewellery immediately as it’s very soft. Usually other metals are added to harden it and that’s how 22kt or 18kt or even 14kt gold is made.

      24Kt gold is usually represented as 999 gold (i.e. less than 0.001 impurities) while exact figure should have been 1000. 22kt = 22/24*1000 or 916 GOLD which is the BIS standard in India for jewellery making. In short, it has 91.6% gold in it.

      Hope it’s clear for you.

    • pankaj 16. Feb, 2014 at 7:04 am #

      Simply you can say 24 ct gold= 100% pure gold

  5. Thomas 18. May, 2013 at 2:21 pm #

    Hello Ajith, this is really a useful article for the Gold Buyers. A Large % of the gold buyers really not aware of how they are getting cheated. This article will really throw some light and help to understand what is going on in the gold market. Thank you so much for writing this article for the public awareness.

    Do you any idea why the price is getting dropped drastically in last one month and is it a good time to buy Gold?

    • Ajith Prasad Edassery 22. May, 2013 at 4:02 pm #

      Hi Thomas,
      Most analysts are predicting the international gold prices to come down to at least $1300 per ounce (and some even predicting 1200. This means that, a possible price drop of 8-10% further from the current levels. I would avoid buying gold as investment at this point.

      There may be many reasons for the sudden fall in prices. With some major analysts downgrading it, a lot of investors started selling gold. Even some treasuries of certain countries sold gold in tons and this resulted in a lot of supply but less demand. The current levels itself are maintained only because of demand from Indian and Chinese retail buyers. While I don’t expect Indians’ greed, passion and religious believes for gold will come down anytime soon, any negative view on gold can result in sharp correction further right? After all it’s just a metal :)

  6. Preetha 30. May, 2013 at 10:22 pm #

    Hi it was a nice article. I have got a doubt.is there any difference in the rate of 916 gold and 916 kdm gold? Because I was trying to exchange a jewellery and they told me that my gold is only 916 .so i was told that they will reduce as much as 5g gold for 55g of jwellery I was trying to exchange

    • Ajith Prasad Edassery 30. May, 2013 at 11:23 pm #

      Preetha,
      Both 916 KDM and 916 Gold (without KDM) are of 22 carat and hence should ideally get you the same price. KDM 916 (i.e. Gold soldered with Cadmium during making) melts faster than normal 916 gold there by saving the jewellery manufacturers some making charges. It’s atrocious that they deduct 10% of the gold value in the name of KDM. I have never experienced it but that may be the new norm with gold prices falling every day – they somehow want to save their money.

      I suggest that you try selling it with other jewelers or even in a different city.

      By the way, internationally many countries have banned KDM gold because Cadmium (extremely toxic) is supposed to be bad for the skin.

  7. naveen 04. Jun, 2013 at 11:30 pm #

    HI Ajith,
    Really nice article!I am from Jaipur, and bought some jewellery a few days back on 25th of may and want to share my experience.
    Let me tell u first in Jaipur (and i think in all cities) every day at 11:00 hrs the rate of 22K and 24K gold get opens and these rates are applicable for the whole remaining day and for next day before 11:00 am in all jewellery shops of Jaipur.
    So on 25th may gold rates were as follows:

    22K=2540INR/gram
    24K=2700INR/gram

    That day i bought two items description is as follows:

    1. A gold chain of 22/22K@2540INR, with weight 20 grams,and making charges 340/gram i.e. [(2540+340)*20]=57,600 INR inclusive all taxes.

    2. A bangle of 22/20K@2540INR, with weight 60 grams,with no making charges i.e. [2540*60]=1,52,400 INR inclusive of all taxes.

    Now as you can see in the case of chain it is 22K i.e. 916 BIS hallmark jewellery, initially jeweler tried to charge 400INR/gram making charge but after some bargaining the deal was set on 340INR/gram, it is almost 13.30% of the gold value.

    In the case of bangles the jewellery is 22/20K gold which means that the skin purity or polish on the jewellery is of 22K but the jewellery itself made of 20K i.e. 83.33% of pure gold.But in actuality when you return 22/20K jewellery to the jewelers he will give you only 80% of pure gold, so i assume that 22/20K contains only 80% of pure gold.

    Now see how smart these jewellers are, when you purchase 22/20K jewellery the jeweller will not charge any making charges from you, but he will charge for 22/22K i.e. 916 i.e. 91.6% of pure gold from you and give you 80% of pure gold.BUT 22/20K jewellery does not comes with BIS hallmark, so if you have great belief in the jeweler only then purchase it.

    Now look at the big game,916 or 22/22K jewellery contains 91.6% of pure gold but as i mentioned the gold rates of 24K and 22K gold you can easily calculate that:
    1 gram of 24K price = 2700
    1 gram of 22K price = 2540
    BUT
    2540*100/2700= 94%

    YES ITS TRUE!! ALL JEWELLERS WEATHER TANISHQ OR ANY OTHER BIG OR FAMILY JEWELLERS ALL CHARGE 94% OF PURE GOLD FOR 91.6% OF PURE GOLD.

    This was all i can understood after lots of calculations, Can you clear me this 94% and 91.6% confusion.

    • Ajith Prasad Edassery 05. Jun, 2013 at 8:52 am #

      Hi Naveen,
      Thanks for commenting here and for sharing the details. It really helps in educating other readers :)

      As for the 22k gold pricing – it will be always a bit more than 91.6% of the price of pure gold. This is because of the melting and strengthening cost of the gold and chemicals/metals used in the process. That’s why it worked out to be 94%. But this part, I would like to trust as the 22k pricing is normalized across all stores. The difference is always in the value addition (VA) part.

      The 20k gold that you purchased, they seem to have added almost similar VA as they charged it as if it were 22k. The problem is while selling the non-hallmarked jewelry.

      By the way, you seem to have got a good deal for the VA for 22k purchase.

      • naveen 05. Jun, 2013 at 9:03 pm #

        Hi ajith,
        Now i understand,this difference stands for wastage.
        Thanks for clearification!
        I have one more doubt, when i was searching information on value addition part last night i read a number of blogs mentioning that if anyone pay more then 10% of gold value as making charge then, he is paying more.please read the article at

        and then u decide, did jeweler really cheated me on making charges or it is normal to have 13% to 16% making charges?

        • Ajith Prasad Edassery 05. Jun, 2013 at 10:42 pm #

          Naveen,
          Well, my belief is that 10-12% VA is a good deal and up to 13 or 14 is fine. But there are complicated designs for which they charge up to 20% for whatever reason. I have never bought such intricate designs. That’s the area where one can negotiate a bit. And when the gold prices go down or up, they tend to play around with the Value Addition. In your case, 13% is not a bad deal, I think.

          Value Addition is something that the government has to intervene and standardize. The jewelers have been charging this as a % of the total price which is illogical. Ideally, the Value addition or making charge (charges to make a certain grams of gold) should be a fixed amount per gram of gold in which case daily fluctuations in gold prices don’t affect value addition and the consumers won’t get cheated.

  8. kiran 18. Jun, 2013 at 1:46 am #

    Hi Ajith,

    I gave a gold chain of 40 grm (22 kt) in a jewelry shop to make a new diff chain by melting the old one. The goldsmith said there is a wastage of 1.5 gm while melting and finally he got 38.5 gm of 916 kt gold bar using which he made a new chain and delivered, which was of 35.9 gms.

    After testing it in lab we got to know that the new chain is not 916. It was measuring 886.

    The goldsmith is arguing that the gold quality reduces after melting. Is that true ?? Is it not possible to make new 916 gold ornament by melting old 916 gold ornament ?? Please guide.

    • Ajith Prasad Edassery 18. Jun, 2013 at 12:02 pm #

      Hi Kiran,
      First, I wouldn’t melt old ornaments and make new with the SAME at the local Goldsmith’s place. Most goldsmiths claim (and I don’t know how exactly) that they will loose some gold during the melting old jewelery. Getting 38.5gm in 916 sounds like a decent deal. However, when you made jewelry out of it, regardless of the wastage, ideally you should have ended up with 916kt end product – may be settle for 35 gms instead of 35.9 but at 916. Now the only issue is that, when you exchange this gold again, you will lose some more money because it’s short of 916. By the way, did you pay him making charges on top of wastage caused? If not, it’s not a bad deal because you still have decent amount of gold with you.

      When you exchange gold, you should do it with REPUTED jewelers only. The reason is that the end product that you get will be not only 916kt but BIS marked as well. I recently exchanged 82 grams of gold (off which around 10 gms where non-standard i.e. less than 916). Finally, I got around 69 grams of 916 BIS marked – new fashion jewelery for my wife – and I didn’t have to pay anything from my pocket (in terms of taxes/making charge/wastage etc all that was calculated in the 13 gms I lost). Although, 13gms sounds like a big waste (which is true when you exchange jewelry), at the end everything was converted to standardized jewelry.

      I don’t know how it works with all other jewelers, but when I discussed this topic with my mother, she said getting 69gms in 916 was a good deal along with new style jewelry.

  9. Dinesh Selvaraj 20. Jul, 2013 at 8:48 am #

    Hi Ajith,
    Yesterday my mother made a purchase in one of the gold jewellery in Coimbatore.Actually it is 40.110 gram simple chain…not much design…They told my mom that they would not charge for making..They only charge for wastage…But the VA is 328.25 per gram (13%)..The gold rate per gram is 2525…So the VA itself 13166.00 of total value….. but I think some how my mom were cheated. BECAUSE HOW COME WASTAGE CHARGE OF SIMPLE CHAIN WILL BE 13%… Now a days every one advertise maximum is 7% only…..please help me through this…

    • Gold Conned 23. Jul, 2013 at 12:40 pm #

      Bought a diamond set consisting of Ear rings and a pendant for my wife on her b’day only to realize later that we were conned big time. The salesman told us that there are NO making charges (MA) on Diamonds and around 10% MA on the 18C gold (Rate/ Gm : 2508)
      So
      Diamond Pendant Gold: 1.092gm X 2058= 2247
      Diamond: 0.19C X 75000= 14250
      VA: 1575
      Diamond Ear ring Gold: 1.764gm X 2058= 3630
      Diamond: 0.13C X 75000= 9750
      VA: 1940
      Total Diamond Cost= 24000
      Total Gold Cost= 5877
      Total VA= 3515
      Total= 33392
      The SA claimed the VA was 10.5% conveniently ignoring the fact that the Diamond did not carry any making charges. After much haggling ( with him and later the manager) they gave us a Rs 1589 discount pointing out the MA was now 6%. We were pleased with ourselves and walked out with the purchase. At home it dawned on us that we were conned big time. On closer inspection we realized the original MA was a whopping 59.8% on the value of gold.
      VA (Rs 3515)/ Gold Value (Rs 5877)X 100 = 59.8%
      The Rs 1589 discount brought down the MA from 3515 to 1926. Still a massive 32.7% on the Value of gold.
      VA (Rs 1926)/ Gold Value (Rs 5877)X 100 = 32.7%
      I always knew jewelers made handsome profits by conning customers, but this was broad daylight robbery. I just may have purchased my last piece of jewelry. Or so till there is some uniformity and transparency in making charges.

      • Ajith Prasad Edassery 24. Jul, 2013 at 2:27 pm #

        Thank you for sharing your experience. Though I once bought some diamond jewellery, I am not aware of how much I paid as VA for the gold part of the same. I need to dig out bills.

        Just now, while browsing around on this topic, I read on a linkedin thread that some people charge 400 to 600 per gram as VA in the case of gold-diamond jewellery. Not sure if it’s true. In either case, what you paid as VA seems to be more than that.

    • Ajith Prasad Edassery 23. Jul, 2013 at 12:53 pm #

      Dinesh,
      Don’t fall for these Gold Jewellery shop ads that claim flat 5% or 6% VA. There’ll be always a ‘*’ or disclaimer along with these low making charge claims. Perhaps in their entire shop not even 5% of the total jewellery will be sold with that kind of low making charges.

      Coming back to your purchase, I guess 13% is not really too much but then 11 or 12 would have been better.

  10. Raghu T. R 06. Aug, 2013 at 7:46 pm #

    I am very happy about this artical because it clears all my doubts about jewellary purchase, thanku verymuch.

  11. CH VSSR PRASAD 07. Aug, 2013 at 2:32 pm #

    Really it is very much nice and educative article. Recently , I along with my wife went to one gold jewellery show room and argued to reduce the so called wastage charges about 14 %, but they have not reduced the same and telling to us , that they will get the ornament from the manufactures with 12% wastage.. Is it true ?. And do you have any idea how to put the investment in Gold funds…

  12. sandhya 28. Aug, 2013 at 12:26 pm #

    HI AJITH,

    YESTERDAY I BOUGHT A GOLD RING WEIGHING 1.640GM AT 3100/GM.THE WASTAGE IS 0.200 AND MC IS 12% AND HE HAS CHARGED ME RS 574 FOR MC.THE RING COSTED ME RS6300 INCLUDING ALL CHARGES BUT NOT VAT.AFTER READING UR ARTICLE I FEEL I PAID MORE FOR MC.PLEASE HELP ME.AM I CHEATED?

    • Ajith Prasad Edassery 28. Aug, 2013 at 1:46 pm #

      Hi Sandhya,
      Well, it depends on the design of the ring. If they ‘claim’ it to be a complicated design, they may charge 15% or 18% as VA. If it’s machine pressed, it shouldn’t be more than 12% or 13%, I believe.

      In either case, I think you paid a few hundred bucks or so extra. 1.64 * 3100 = 5084 is your gold price. Even if you add 15% VA, (Rs. 762/-) it should have been around 5850/- before VAT. Looks like your jeweler charged the VAT at 24%.

      Since the gold price shot up to all-time high price yesterday at 3099/gm for 22k gold, the jewelers must be having low business and hence increasing value addition charges.

      (This is my version, I would like to know what the jeweler think)

      Best regards,
      Ajith

  13. anchal 30. Aug, 2013 at 1:00 pm #

    hi ajith, i bought 25.8 gms pair of bis 916 hallmark bangles from gaja jewelers 2 yrs back. they took no making charges as inaugural discount.after abt a yr, i had to get them exchanged because they got out of shape.this time they charged 11000 as making charges of the new pair that i took, which by the way was a duplicate of the previous ones in weight and design. not even a yr, and the screws of the bangles have become loose.on asking for exchange, they said that buying and selling rates of hallmark gold are different and they would deduct 150 rs per gm if i sold or exchanged it from them. my doubt is, can the jeweller cut money like this on his own hallmarked gold?is the buying and selling price of gold really different?what should i expect from any other jeweller if i exchange or sell these bangles from them ?is gaja jewller not supposed to give 100% buyback on their own gold without any deductions?am really confused and have put my exchange on hold till your answer.plz help.

    • Ajith Prasad Edassery 30. Aug, 2013 at 3:21 pm #

      As far as I remember, whenever we exchanged 916 gold purchased at the same place, we got 100% exchange rate. My family had good experience with Bhima on this account and even Chemmanur in Bangalore when it comes to exchange. Anything less than 916, they promptly reduce the price anyhow based on purity. When I wrote this article, we had exchanged gold varying from 18kt to 22+ and for each we got the price based on quality. I suggest that you take the same gold (if it’s BIS marked) to couple of other jewelers and take their opinion as well.

      By the way, there’s a catch in the exchange deal. Some smart jeweler might offer you 100% exchange rate instead of deducting Rs. 150 per gram (or around 2% of the current market price). On exchange, if he charges you 2% extra, he is still at benefit right? So one good question to ask is whether there’s any difference in buyback price if you decide not to buy anything from them.

      • anchal 02. Sep, 2013 at 10:16 am #

        another qs is …is the buying and selling price of gold actually different?the jeweller said so…also, if we exchange he gives 100% value at the current rate(plz note again theres a difference bw their buying and selling prices).however by doing so, we ll again be charged the making charges for the new piece of jewellery. but if we simply want to sell it and involve no exchange, then he says , he’ll be deducting the making charges on his own ornament. cud u clarify?

        • Ajith Prasad Edassery 02. Sep, 2013 at 11:29 am #

          916 gold can be sold at the current market price with your original seller or another good and clean jeweler. Needless to say, when you exchange you will end up losing 15% to 20% because of the VA/VAT charges on NEW jewelry. This holds true regardless of exchange or new purchase. BUT if you just want to sell 916 gold, typically good jewelers should pay you at the market price. That’s why I am recommending to try other buyers.

  14. sudhi 01. Sep, 2013 at 10:30 pm #

    What is batta? Is it wastage? I gave a gold ring 22k to made a new ring, and the jeweller told me to but 20-30% as batta. What is it?

  15. sudhi 01. Sep, 2013 at 10:33 pm #

    To Cut batta coz design was complicated of the ring i sold

  16. Sandhya 20. Sep, 2013 at 5:22 pm #

    Hi Ajith,
    Your article seems to be quite an eye opener. Thanks to you.
    I saw an antique jewelery set in Khazanna jewelers, chennai and following is the break up of charge:
    a)Necklace: Gold rate @ 2838 Rs/gm
    Actual Weight: 130 gms
    Wastage: 27.3 gms
    Price of Neckale (130+27.3) gms: Rs 446417

    b)Earrings: Gold rate @ 2838 Rs/gm
    Actual Weight: 43.160 gms
    Wastage: 9.060gms
    Price of Earring(43.160+9.060) gms: Rs 148200

    c) Vat 1%: 5946

    Total Price of Jewellery Set (a+b+c) : Rs. 6,00,563

    Is this a good deal? Seems to me that the wastage is on quite an high end (more than 20%) since I had noticed that jewellers like GRT have charged 15% to 18% wastage on antique jewellery sets. Can I quote the same with Khazanna jewellers and see if I can get a good deal?

    • Ajith Prasad Edassery 26. Sep, 2013 at 11:19 pm #

      Sandhya, 20% or more wastage is probably due to very intricate design work that you opted for your necklace. If it’s a very simple work, it should be below 15% or in the best case around 12%.

      • Sandhya 27. Sep, 2013 at 12:44 pm #

        Hi Ajith,
        How come few of the jewellers (Lalitha) are able to provide designs of the same type for wastage less than 8%.

        • Ajith Prasad Edassery 27. Sep, 2013 at 1:59 pm #

          Because there’s no standardized approach or norm here :) That’s exactly what I was talking about in this article. The lesson here is that, if two vendors are providing hallmark 916 gold jewellery and one is charging less VA, you should obviously go with that one. Smart buyers like you should be able to make informed choices.

          I hope that the government standardizes the gold jewelry pricing at some point of time. I mean, I would like to buy gold just like any other commodity with a fixed % of sales tax, VAT and/or service tax.

  17. pavithra 30. Sep, 2013 at 10:10 pm #

    Hi
    could you tell the common wastage of
    1. chains,rings,earrings,necklace,bangles(without stone and with stone)
    2. mild designs & heavy designs wastage percentage for the above ornaments.(chains,rings,earrings,necklace,bangles)

    • Ajith Prasad Edassery 10. Oct, 2013 at 6:58 pm #

      Pavithra, no idea :) Read my other comments – for intricate designs, it an be even 20 or 25% while normal designs, it’s ideal to have the VA between 5 and 15%. Basically, there is no norm.

  18. Pari 13. Oct, 2013 at 11:40 am #

    Hi Ajith

    Very informative article. I have a plan to buy gold bangles. Should I go for handmade or machine made ??
    I stay in Singapore and making charges is very much compare to bangalore. It is about 12,500 rupees for a pair of bangles. At the same time no making charge or machine made bangles. Just confused between hand made and machine made. When I saw machine made bangles, it looks like artificial bangles.thinking whether to buy in bangalore or here..

    • Ajith Prasad Edassery 14. Oct, 2013 at 10:13 am #

      I think the Handmade vs Machine made question is purely an aesthetic decision. You are right about the ‘looks’ of machine made jewelery.

      Before considering where to buy, you need to make sure that you are getting the ’standardized’ gold for the price you pay. Like India has BIS standards now, there must be something in Singapore for marking 22k or 24k gold right? So the best thing is to compare the rates and VA (making charges + taxes etc) in both Bangalore and Singapore for the SAME Karat rating and take a decision.

  19. Rajan Patel 13. Oct, 2013 at 3:59 pm #

    Hi,
    I recently went to a Swarnmala Jwellery shop at Ghatkopar Mumbai. We have selected 2 Mangalsutra 916 Hallmark total weighing around 11grams. However we showed him our ornaments which we wanted to exchange for gold. which included Mix Jewellery of 916, 20/22kt, KDM, and some OLD SOLID GOLD used by my grandmother.

    Now for the gold they say that the current rate of 24K is Rs. 3050, so for 916… they will pay me Rs. 2794, for KDM rate would be Rs. 2561… however in some jewellery inspite of the 916/KDM/20/22 Markings, the salesman says that they shall deduct 10-12% for those pieces.

    Purchase rate for us was higher than what they are giving in exchange of our jewellery.

    Is this what all jewellers follow?

    • Ajith Prasad Edassery 14. Oct, 2013 at 10:06 am #

      Most jewelers do that. However, the ones with 916 markings are supposed to be taken back by the ’same’ jeweler at the current market price. Not sure how many are following that.

  20. agastya 05. Nov, 2013 at 2:28 am #

    hi Ajith!

    I am agastya from jaipur. I got good amount of information by reading articles and talk backs.

    I have few queries-
    1. did u ever get the market price on 916k gold jewelry even if sold rather than exchanging it with the same jeweler?

    2.i have some receipts of the jewelry bought by my father in 1997-98.now while once old jewelry was exchanged on the mkt price but on some of the receipts , it is written that “22 k jewelry is returned at cost of 80% value of pure gold”.
    now , is it fair?? On receipts , wastage cost is not mentioned at all. merely , weight of gold in grams is written and labor charges are written.

    now , how can they charge 11.6% on 916 jewelry? that too, openly declaring on their receipts??? do u find it interesting and would you like to figure out it??

    • Ajith Prasad Edassery 06. Nov, 2013 at 8:23 pm #

      If I remember correctly, I got full value for my 916 exchange purchased from jewelers like Bhima. But then yeah, they will charge VA again for anything new that you buy. Sometimes, if we don’t buy anything from them while exchanging there’s a possibility that there may be some reduction (as some commenters mentioned here)

      But giving only 80% of the value for 22K gold is not fair.

      • kuro 01. Mar, 2014 at 4:51 am #

        hi ia m kuro , and i love ur article , recently
        i sold my 22ct hall mark ring to a jeweller he deducted 20% on it, and said it has taka in it
        was i ripped of , please tell

  21. agastya 06. Nov, 2013 at 5:03 pm #

    HI
    ANOTHER thing i want toask you is that so called “wastage charges” are taken at time of buying or at time of selling??? it cannot be taken two times, isn’t it? offcourse , maximum ” melting charges can be taken at time of selling.. i guess. i also noticed, that every day, in daily newspaper, the cost of buying and selling 22 k gold jewelry is published and the diffrence is generally is 600 rs per 10 grams between the two. Have you noticed it?
    for example, today’s rates in jaipur is written -
    buying 22/22=29400/10gram
    return 22/22=28800/10gram
    gold 995 =31,200/10gram

    • Ajith Prasad Edassery 06. Nov, 2013 at 8:25 pm #

      Just answered above as per my understanding

      • Satish 09. Nov, 2013 at 1:39 pm #

        Hi Ajith,

        Thanks a lot for a such a nice article on jewellary buying. Iam actually planning to buy some jewellary these days. Basically i dont know anything about the jewellary shopping but this helped me a lot. But i have one question. If you are buying a jewellary with stones on it along with gold. How do you verify the weight of a gold and stones or diamond seperately?

        • Ajith Prasad Edassery 12. Nov, 2013 at 10:15 am #

          The gold value and the stones value/weight are calculated separately and mentioned in the bill. We have to go with what the jeweler claims in this regard. For the stone (i.e. the costlier part) a separate certificate (usually a plastic card like CC) will be provided on which the precious stone details (karat, clarity – color codes etc) are printed. In my opinion, it’s better to go with 22kt gold base for diamond jewelery as well as against 18kt or less as practiced by Tanishq etc.

  22. Akshay Gupta 18. Nov, 2013 at 12:08 pm #

    Hello Ajit,

    I was going through the article and all the comments, you have given well information.

    However i would like to say that government cam never intervine and standarise the “Value Addition” costing part, because even there is no standard cost we jewellers pay to the karigars.
    You see bow a days a lot of diamond jewellery is bening manufactured using high tech Cad/Cam casting machines where there is really zero percent gold wastage loss,
    But plain gold jewellery is still manufactured majorly by hand by our people known as Karigars in India, so in reality there are charges that they take for working day and night on a jew piece, the fee for their hard work, even we jewellers pay them value addition. The value addition differs from items to items, designs to designs. There are some very complicated designs which requires more of their time, labour hardwork as each is manufctures by hand, for which Karigar charge more and thus inturn jewellers charge more. So there can never be any standardisation in “value addition”, even government knows this otherwise they would have intervined a long ago.

    I agree, customer must seek information and must make sure that they are buying or getting the purity that they have asked for. They should clearly discuss with their jewellers.

    I would like to give advice to the consumers, please buy only Hallmark jewellery, and not necessary yoh buy 22kt hallmark only, if your budget is low then you can buy 18kt plaim gold hallmark jewellery, but buy only hallmarked jewellery and negotiate on the value addition. But you can never get genuine jewellery without paying Value Addition.

    • Ajith Prasad Edassery 20. Nov, 2013 at 2:44 pm #

      Hi Akshay,
      Thanks for pitching in with the Jeweler’s view on this topic – it’s a very valuable for all readers here.

      Good to know that you actually pass on the making charge benefits to the Goldsmiths.

      However, there are many unsolved issue yet as highlighted by many readers here.

      E.g.

      1. Some jewelers not giving 100% value of the gold when they buy back even when the gold is BIS marked and bought from the same jeweler. Basically they are charging making charges twice. This is not acceptable.

      2. Two different jewelers charging vastly varying making charges for the same type of jewelery

      3. Outrageous wastage charges when we want to convert our old jewelery into new designs.

      I understand that standardizing the VA may not be 100% possible but at least for certain design categories, the government could certainly say, the VA cannot exceed a certain %.

      What do you think?

      Thanks for pitching in again…

  23. Sapna 02. Dec, 2013 at 10:42 pm #

    Really really helpful. Thank you very much Mr. Ajith.

  24. nasreen 21. Jan, 2014 at 3:32 pm #

    Thank you Ajit. This information help me alot. I purchased gold asking sales man withloads of queries and get good discount in making charge.

  25. Ajith Prasad Edassery 23. Jan, 2014 at 12:36 pm #

    Glad to be of help, Sapna and Nasreen.

  26. Syamala 25. Jan, 2014 at 2:33 pm #

    If we purchasing 916 gold what is the wastage on Chains, Neckless, Ring, Bangles, Ear rings

    • Ajith Prasad Edassery 27. Jan, 2014 at 2:57 pm #

      Syamala, there’s no ‘fixed’ wastage charges and that’s exactly what we are talking about. It can vary from 0 to 30% or even more for complicated designs. However, very basic machine cuts should be cheaper and sometimes zero percent as well. For normal handmade designs, I have seen it varying from 8 to 15%.

      It makes sense to compare between stores and negotiate.

  27. nizar 01. Feb, 2014 at 5:49 pm #

    Thanx Ajith for a nice article. My doubt is about buying 24kt gold coin and that too from banks. The aim is to invest money/savings as gold coin, is it a right decision?
    Or better with 22kt gold coins?
    Also what will be the price if I sell this 24kt gold coin in a jwellery from kerala ?

    • Ajith Prasad Edassery 01. Feb, 2014 at 9:36 pm #

      Nizar,
      It’s always better to buy 24kt gold coins. Also, NEVER buy from banks like ICICI or SBI as their charges are very high (at least 7-8% more) because they usually import coins. Anyhow, they will never buyback from you and hence it make no sense.

      It’s always better to buy gold coins from a reputed jeweler. I am not sure but jewelers like Kalyan must be definitely having 99.99% pure gold coins. Here in Bangalore, the safest option is to buy coins made by Bangalore Refinery (BRPL) which is available in many leading jewelry shops.

      As for gold as an investment route, I am not a big fan of the same though it gives you good returns in the long term.

  28. nizar 01. Feb, 2014 at 10:46 pm #

    But at present, no jweller is selling gold as coin. If we want to buy, we have buy it as an ornament having VA.
    Also how about buying gold through online like caratlane.com ?

    • Ajith Prasad Edassery 01. Feb, 2014 at 11:28 pm #

      Not sure why they are not selling it in coins there. Here in Bangalore, no issues as per my knowledge. Caratlane sells 995 gold while banks, Bangalore refineries etc sell 999 purity. So I would go with anyone offering 999.9 or even 999

  29. Rajesh Yadav 02. Feb, 2014 at 9:17 pm #

    Mr Ajithprasad,
    I am rajesh from mumbai. I am getting married in may2014 in my village situated under district Allahabad. And my family planning to buy one necklese i.e haar (of 2.5 tolas) and 6 gold bangles i.e choodi (????) not kangan (3 tola i.e 30 gram). I want to know that what other things needs to be taken in care apart from your article things.
    I am planing to buy from my village’s gold smith. I asked him for BIS Hallmak. He told me that u don’t take hallmarked gold. It will be costlier for you. I’ll give my hand made gold with our hallmark. He told me that in hallmarked gold you will get returns of 91% and you will be charged 15% extra on prevailing gold rate as making charges.

    If you’ll take from us then you have to pay only for those gram which you are purchasing.
    His example given to me in his words:
    Suppose you are buying 10gm=30,000 Rs. You have to pay only Rs 30,000 for 10 gram and it will be weighted by us. And no more extra cost, means we will not take 11 gram’s money for 10 gram. And when you will sell it to us we will give 82%.
    He will charge Rs 1000 per bangles (i.e 6*1000=6000) as making charges. For neckles I don’t asked.

    In nutshell (as per my interpretation):
    Hallmarked gold:
    For 91% gold I have to pay price of 99.99% gold rate + 15% as making charges

    His gold:
    For 99.99% gold I have to pay price of 99.99% gold rate + making charges per article (like 6*1000=6000)

    What should I do? Whether shoud i buy from him or not. If yes then which one hallmarked or his gold. His schemes seems attarctive.
    Whether should I buy from Mumbai???

    • Ajith Prasad Edassery 03. Feb, 2014 at 6:43 pm #

      Rajesh,
      It’s always better to purchase BIS marked 916 gold as they guarantee the 22k purity. Further, they are easier to sell anywhere and get a good price. If your local goldsmith promise you the same purity, you may have to cross check it on an electronic karat meter that’s found in most good shops.

      I had the experience of selling gold made by local jewelers and gold smiths (that we got as gifts etc over a period of time). To my surprise 80% of them were varying from Karat 19.5 to 22 while they claimed to be pure 22k. So, I would say go with a good jeweler – I cannot recommend any store in Mumbai or Allahabad though.

    • Parul 16. Feb, 2014 at 11:26 am #

      Rajesh
      There is as such no hallmark of any Particular shop.There is only BIS Hallmark. Its just a new method of be fooling costumer adopted by that shopkeeper. Me too had a little bit same experience but be cautious all these are just techniques of making full out of a costomer.

  30. saravanan 03. Feb, 2014 at 6:24 pm #

    Hi
    Could you tell alternate metal for cadmium and which metal used on olden days.

  31. ameena 11. Feb, 2014 at 7:52 pm #

    hai,
    such a nice article this is .i am planned to buy some gold ornaments in qatar.bt i have a doubt that is some white color stones r fixed in that ornaments .at the time of selling how much would dedacted from the gold.is this profitable for me.please reply me .

    • Ajith Prasad Edassery 18. Feb, 2014 at 9:06 am #

      Stone weight and gold weight are usually mentioned in the bill separately. Not sure if that’s the case in all countries.

  32. Parul 16. Feb, 2014 at 11:27 am #

    a very nice and useful article. thanks a lot

  33. Sourabh 03. Mar, 2014 at 11:30 pm #

    Hi Ajith,
    I want to buy some gold wedding jewellery. Which showrooms or shops will be best for buying gold ornaments in Bangalore where making charges, wastage charges will be reasonable and the product will be trustworthy?

    • Ajith Prasad Edassery 05. Mar, 2014 at 6:01 pm #

      @Sourabh, I do not know a lot of stores in detail. However, I had the experience of buying some jewelry from Chemmanur and Bhima – and both were good. I also did some purchases in the past from Gold links, Alice etc but wasn’t quite happy.

      For gold coins Navrathna seems to be very good. There was a 10gm coin gift from our company once and it was from Navrathna. When I sold it the machine showed more than 22ct purity and I got a very good rate for that piece.

      • ishan 07. Mar, 2014 at 9:00 am #

        Hi ajith,

        I am planning to buy gold coins worth 30 gms…divided in a coin of 20 gms and the other of 10 gms. Those coins were in a laminated cover and the jeweller assured me that those were fine quality 24 kt coins. I asked for the bis mark…he showed me the number..999.5 as the sign of purity, however,the cover mentioned about the assaying centre but except from the claimed 999.5 % the bis components were not found on the coin:
        the bis mark
        the assaying centre logo
        the merchant logo
        the year of manufacture

        How would you suggest i take it from here. Would insisting on the bill that the jeweller submits to the government insure my purchase. Because last year even though i got the bis marked coins, the merchant gave me the bill but not the one he gives to the government.

        Do throw light on such persuasive aspects

        Thanks

        • Ajith Prasad Edassery 07. Mar, 2014 at 9:39 am #

          Although it may be slightly more expensive, I would suggest you to stick to buying BIS marked articles and obtain a proper bill with taxes. Why take risk especially when the government itself is recommending to buy only BIS marked gold.

          By the way, there are people who still buy pure gold (non-BIS) from their trusted family jewelers. This friend of mine has been buying gold coins every single month since last several years and he never bought BIS marked ones! He seem to trust his jeweler :)

  34. GS SAXENA 09. Mar, 2014 at 5:31 pm #

    Hi Dear Ajith, I have to buy some ornaments of Gold, but due to extreme rise in the cost, is it reasonable to buy some heavy ornaments of 18 Karat Gold. Please suggest. Thanx

    • Ajith Prasad Edassery 10. Mar, 2014 at 9:16 am #

      I would think it makes sense to go for 22k (916) and reduce the number/weight of jewelery to be purchased than going for 18k. After all, 916 is the most popular formulation in India.

  35. kashish 10. Mar, 2014 at 1:06 pm #

    Ajith,

    Does the market value of a gold coin or jewellery diminish, if resold, without the bill? Or, Why is a bill so important when the merchant charges exorbitantly for it?

    • Ajith Prasad Edassery 11. Mar, 2014 at 6:03 pm #

      Value of the gold is linked to market conditions just like any other commodity. And why is the bill asked for? Well, the original bill of the 916 gold will contain the hallmarking details of the jewelry. Sometime if the BIS mark details are worn out on the jewelry OR if the jewelry piece is too small to print/read the etched marks, the bill is handy. I guess that’s the reason. However, I am not a subject matter expert on that part… Sorry.

  36. Bharati K 15. Mar, 2014 at 3:46 pm #

    Very very useful article

    Thanx Author.

    U have done a great job.

  37. Nirav Shah 23. Mar, 2014 at 12:58 am #

    very good piece of information,very well scripted & well written.

    really loved it. Keep it up :)

    My only recommendation to you is don’t tell people to go for ETFs. Its much costly & comes with many charges.
    Buying Gold coins will be better.

  38. Rakesh sharma 28. Mar, 2014 at 2:26 pm #

    they talk only about making charges and give discount upto 30 to 50 rupee per/g. and their 22krt Gold price is more by 1% in each and every shop had different 22Krt Price….

  39. rajeshwari 30. Mar, 2014 at 4:36 pm #

    Thanks ajith…very useful comments

  40. rajeshwari 30. Mar, 2014 at 4:41 pm #

    Presently am having gold of 24 k 30 grms planning to purchase 22 k bangles of each 15 grams how much I should pay MC ? Pls advice

    • Ajith Prasad Edassery 01. Apr, 2014 at 6:30 pm #

      No idea Rajeshwari. Exchanges are always tricky – especially when different karats are involved. As I mentioned many times, it can hugely vary from 5 to 15% for normal designs and up to 30% for intricate ones. There’s no thumb rule here! Something like 10-12% sounds reasonable for very normal designs – that’s all I can say.

  41. Venkatesh 02. Apr, 2014 at 1:38 am #

    Hi Ajith

    I am working in a GCC Country called Qatar. Is there any profit for me if I buy 1 tola in Qatar and sell it in any jewellery shop in Chennai. I heard the jewellery shop reduces some amount.

    Or Can you suggest me what is the best alternative to get some profit and not lose money. Because, when I buy 1 tola from the GCC, it is always at a premium from the spot market. Therefore, I don’t want to lose any more money when I sell it or exchange by buying some jewellery in Chennai in the long term future.

    • Ajith Prasad Edassery 04. Apr, 2014 at 6:54 am #

      Venkatesh,
      I am not an expert in this matter. However, I remember talking to a friend from UAE two years ago regarding bringing gold from Dubai and he (then) said there’s roughly 15% difference in the prices which seems to be right even now.

      E.g. as of today (April 3, 2014)

      Price of 1 Tola of 24k gold in Qatar = QAR 1756 (Rs. 29000 at the current exchange rate)
      Price of 1 Tola (11.66gms) of 24k gold in Chennai = Rs. 33500 at today’s market rate

      You can see that there’s a difference of 15% there. However, you save that much ONLY when you import within the free duty limits. If you decided to bring in more, you end up paying roughly Rs.2750 per Tola as import duty and hence your immediate saving reduces to something like 5%.

      And when you exchange the above for jewelery, obviously you are going to lose some money towards making charges etc.

      I personally do not see a major gain in the above process. In fact, you can lose some money if making charges are high for the type of jewelery you exchange with. Perhaps, you may have to consult experts in this matter.

  42. sunil 10. Apr, 2014 at 9:24 am #

    Hi Ajith

    I bought 10g of 916 gold chain on 8 mar 14 , on that day gold price was around 30600 for 24kt . he charged us for 30200 per gram as shop wala told it is 23kt. todAY I found in your site that 916 is 22kt i think he is cheated,pls let me know what should be done now

    • Ajith Prasad Edassery 10. Apr, 2014 at 10:23 am #

      Sunil,
      916 Gold is always hallmarked on the jewelery. By BIS standards 22kt gold is what is called 916. There may be minor variations at time – i.e. it can be as high as 918-920 max but it’s never 23kt if hallmarked as 916. Jewelers are not saints to provide 23kt (~958) gold for 916.

      The purchase bill should also state that it’s 916 gold and clearly have entry for prevailing rate/gm. The rate of gold, making charges, tax etc should be present as separate line items on the bill. If you have such a bill, you can directly take that to him and question him on being cheated. You have a point with you as the highest price for 22kt gold this year has never crossed 2900/gm and on 8th March it was around 2840/gm which should be present in the bill.

      Now, if it’s not 916 hallmarked jewelery, you may have to take it to another jeweler and check its purity on his machine before taking on your jeweler. You never know, if it’s not hallmarked, the purity can vastly vary. It could be 23kt or even below 22kt for that matter.

      Good luck in your investigation.

  43. Dinesh 14. Apr, 2014 at 2:07 pm #

    Dear Ajit ji,
    Plz help me agst purchase of jewellery, Today price of 916 bis hallmark Rs.28900 in mumbai as per jeweller, my question is whenever i sold in future then jeweller told me u will get 100 % price like just rs. 28900 or rate available on that time. is it true? My another question i am giving him my old jewellery 10grams agst new purchase which was imported 916 bt n ot holemarked,and jeweller taking 10*91.6=9.16 grame, he saying me its only 91.6%, he also tell me if 916 bis tean we will not deduct.

    Plz help sir

    • Ajith Prasad Edassery 14. Apr, 2014 at 3:42 pm #

      Dinesh,
      If you have 916 hallmarked jewelry you will get 100% of the current market price when you sell the same. However, even when the jewelry is pure 22kt but not hallmarked, jewelers deduct some money for no reason.

      The best thing is to take the 916 jewelry to the same jeweler where you bought it – probably with your original bill. That will make sure that you get the full money!

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