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 jewelries 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.

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

  1. Ashwini 12. Nov, 2015 at 1:40 pm #

    Hi Ajith,

    I recently bought a gold bangle with 16 gm from a reputed gold shop in Bangalore. They have charged 22% extra , when asked they said it includes labor charge and wastage and everything. And the gold rate on the particular day was 2438/- per gm.

    Is it worth to give 22% extra for all those wastag, MC and al ?

    Thanks,
    Ashwini

    • veena singh 21. Apr, 2016 at 7:26 am #

      kl maine tanishq jwellary shop se 5 gm ka golden coin liya . Aj k 10 gm gold k hisab si coin pda 16947 me to kya ap bta skte h ye ye rate sahi h

  2. JOTHIMURUGAN 22. Nov, 2015 at 4:28 pm #

    Dear sir,

    today i am buying goldchain 24 grams in inia can You tell me around cast of the gold today india gold rate Rs 2403 wastage of chain & dollar

  3. Nirmal Kumar 26. Nov, 2015 at 3:02 pm #

    I bought Rs.80,000 worth cost of gold ornaments. Shopkeeper demanding 10% charges as hallmark gold. Is it right or not, please understand me in detail. Also tell me the charges of hallmarked jewelry / gold. I am very much confused about this. Every jewelers in area demanding 10% extra on hallmarked gold/jewelry. Send me the details hallmarked charges details.

  4. Subhash Ch 26. Nov, 2015 at 5:37 pm #

    Excellent post.it helped me a lot…

  5. rajesh 29. Nov, 2015 at 9:54 pm #

    Hello sir
    I bought gold 10.58 and 5.94 grm.that day rate was 2490 per gram.they have charge to me 8% police and making charge 1 grm on every10 grm .like 10.58+5.94=16.52grm they charge me 1.65 grm as making charge.
    so sir plz guide me.
    and where I complaint againt him.

  6. Jabu 02. Dec, 2015 at 8:58 am #

    Really good tips

  7. Steven gonsalves 10. Dec, 2015 at 4:19 pm #

    Excellent information.

  8. Nilantha 20. Dec, 2015 at 12:23 pm #

    Dear Sir..

    january last i will buy 40 gm gold chain.please tell me how much your cost.Qr

    Thank you..

  9. Sushma 30. Dec, 2015 at 4:47 pm #

    I already putting to make necklace of 15 grams in 24 carat in belgaum jewellary shop. they told me they getting return at 88% and 12 % wastage. Please tell me how much i pay them and what is the wastage and return price.

  10. RESHMA 12. Jan, 2016 at 1:56 pm #

    I want to know today’s 22 karat gold rate??

  11. sanjay 17. Jan, 2016 at 9:52 pm #

    I wish to purchase gold for Bengal.what can i do? Readymade purchase or making through jewellers? Kind help me and given reply? My budjet is 50000 rs.

  12. nagaraj 15. Feb, 2016 at 12:05 am #

    Good and very important details, thank you sir

  13. Rajendra Yadav 15. Feb, 2016 at 6:51 pm #

    Sir, How can I Check that the bill given by the gold/silver jewellery dealer is original ? what information a tax invoice of Gold/Silver jewellery bear on it? Thanking you in anticipation.

  14. Rajendra Yadav 15. Feb, 2016 at 6:53 pm #

    Sir, How can i Check whether the bill given by the Jewellery shopper is original ? what information should it(Bill/invoice) bear on it ?

  15. Pratik kumat 18. Feb, 2016 at 8:34 am #

    Sir what the policy about to exchange or returning of gold jewellery of 91. 6 hallmarked

    • Ajith Prasad Edassery 26. Feb, 2016 at 4:56 pm #

      Ideally, they should give you back the full amount as per the present day value of 916 gold. Some jewellers reduce nominally though – like 50 or 60 per gram.

  16. Reena 22. Feb, 2016 at 1:45 am #

    I wanted to know to if some jeweller asking me for 82% wastage and making charges which includes labour chargeres wastage etc that for 14k diamond tops wat should I do. I m from delhi and he charge me gold rate of 3grMs of rs 2900 per grm. While my gold was of 3.67 grms. Should I complaint against him or wat should I do

    • Ajith Prasad Edassery 26. Feb, 2016 at 4:54 pm #

      I do not know how it works when it comes to the wastage charges for diamond jewelry.

  17. Dipak 04. Mar, 2016 at 10:27 am #

    Dear Ajith,

    Many thanks for making sense on what is pure gold
    and pitfalls to avoid while buying Gold.
    I never buy gold cause this whole process just beyond my comprehension and mind it I Software Developer, so we are suppose to be smart people. But Glittering Gold can really fool you and you never came to know about it in your life time. Cause most of the cases we buy ornaments for wife, who preserve it for generations. We can not avoid buying gold, but thanks to you, we can at least remain vigilant on what we are buying. Thanks again

  18. Varun 06. Mar, 2016 at 10:38 am #

    Pls suggest me bsi hallmark gold is good without bsi

  19. Pallabi 06. Mar, 2016 at 6:54 pm #

    The above article is quite informative…but I don’t understand why we need to pay the wastage charges of gold when d waste material is already recovered by the goldsmiths through different advanced machines…..??

  20. abhay 21. Mar, 2016 at 7:51 pm #

    really enlightening.
    Pls write about other topics also

  21. Bhushan 23. Mar, 2016 at 4:02 pm #

    Here really I think no one knows about the correct meaning of wastage charges, wastage is the part where the gold Smith gets its profit, when you work on ur own or in any company for that u get remuneration or salary na now that’s your profit, so same way the wastage charges is the profit to gold Smith, actually this travels to many process like first there is gold Smith who prepares the jewellery then it’s supplied to wholesaler then to shop, the profits of all this adds up and comes to that certain %, if you think that you pay for gold then that’s profit, what will be his profit if he buys gold at rs25000 and sells at rs25000, so the wastage charges are profits……

  22. Koushik 26. Mar, 2016 at 12:03 pm #

    Thanks, for writting.. It’s a great help to me. Very clear and nice instructions. Keep posting :)

  23. Saurabh 04. Apr, 2016 at 7:59 pm #

    Very helpful tips thanks

  24. Jayasankar 11. Apr, 2016 at 3:32 pm #

    Now you can check the Purity of Gold.Legal Metrology Department launched the free gold testing facility at its PWD building near Golconda crossroads, Gandhinagar ,Hyderabad 20 days back. This legal dept is in all metro’s and mini Metro’s. BJP govt introduced recently excise duty on Gold Jewellery only to put an end to malpractices done by Jewelers. Now Soon Legal Metrology dept will give certificate and this is valid in any court. Legislation will be passed soon by Central Govt soon. once it is done you can sue Jewelers and take them to court ,if they sell impure Gold Jewels. This is giving Jewelers a Nightmare. All these years they were making huge money with help of Congress Govt . Now this govt is clean and they could not do anything and opposing the Kalal on Gold. Please support the Govt , not the Jewelers who were taking people for ride all these years.

  25. ashish 27. Apr, 2016 at 10:12 am #

    nice details…..

  26. sherin 04. May, 2016 at 12:13 pm #

    It’s really usefull artical. Thanks.
    If buy 64 gram bangel , how can price it??

  27. Rishabh 13. May, 2016 at 12:45 pm #

    Hi Ajith,
    I have been reading the comments here since a long time, it’s a great place to know about gold. You should start a forum, that would be great. Yesterday I went to grt jewellery shop. I got 28.9 grams of scrap gold melted. The purity of the melted gold was around 0.81% to 0.833%. The guy at the store said he would give Rs.65780/- for 28.723 grams of 20k gold. When I asked how, he says he is multiplying the weight × purity × price of 22k gold i.e 28.723×81%×2828. I was like you can’t do that you have to do it this way 28.723×81%×3000, because he has to multiply it with 24k gold price not 22k. He was like oh no, we don’t do that Coz we have to refine the gold and for that we need to buy 24k gold etc etc etc, all Bull crap. I then he gave me a final price of 69k. I didn’t go for it because even if I wanted to buy something new I would get just around 20 grams. I was wondering if should take the melted gold to a small local shop and ask him to make a bracelet with my gold. So the weight would at least be 28 grams.
    This is a very common cheating method used by jewellers when calculating price of your old gold, so please buyers beware. For example, If a piece of your melted gold is 77% pure then that means there is 77 parts pure gold and rest is copper/silver etc. And that 77% should me multipled by 24k gold price.
    Thanks and regards,
    Rishabh.

  28. Sangeetha 18. May, 2016 at 11:37 am #

    I’m going to buy gold long necklace I need to know wastage charge and making charges

  29. Theju 22. May, 2016 at 4:42 pm #

    Hi everyone I think lalitha jewellers are the best coz they do not charge anything for making and they offer low wastage up to 6% and on few jewellery upto 8%. I compared it with malabar josallukas joyallukas kalyan RR gold palace Lakshmi jewelers and Sai gold palace

    • Rishabh 24. May, 2016 at 10:40 pm #

      Hi Theju,
      Where is lalitha jewellers? In which city? Any contact info?

      • Ajith Prasad Edassery 25. May, 2016 at 12:29 pm #

        It’s in Bangalore. I get to see their full page ads during auspicious days.

  30. fahad nabeel 31. May, 2016 at 1:53 am #

    I have 1 gram gold I think it’s today prize 22000 & I will ask shopkeeper how much rupees got that they will give me 15000 rupees only what is the difference between to amount how to calculate the amount ?plz give me the answer how to calculate the amount in shopkeeper

    • Ajith Prasad Edassery 31. May, 2016 at 9:39 am #

      If it’s 916 gold, you will get today’s market price (with minimal reduction such as 50-60 rupees per gram by some jewellers). If your gold is not 916, then they usually reduce the way they want.

    • Roshabh 31. May, 2016 at 10:29 am #

      Hi Fahad, what is the purity of your gold, as Ajith has said, if it is 22k you will get the exact price. But if you have gold that is less pure like 21k to 14k, they usually use the formula as weight×purity×22k price.

  31. prathima 01. Jun, 2016 at 7:14 am #

    Handmade and machine work what’s the best buying jewellery

    • Ajith Prasad Edassery 02. Jun, 2016 at 9:07 am #

      Hmm.. Good question! I think, exquisite designs are best when they are handmade – just my thinking :) but then the making charges may be quite high. Machine work usually offers low making charges. Hopefully other readers will comment further on this topic.

  32. Yogesh chauhan 09. Jun, 2016 at 11:03 am #

    I had a ring without BIS hallmark. I want to sell it and want to buy another one. is it legal or illegal. Please tell me asap.
    thank you

  33. DINESH kumar jain 11. Jun, 2016 at 5:04 pm #

    Sir today I want to purchase gold bangle 60grms so plz tell me about making charges on kalyan jeweller jaipur.
    Thanks.
    DINESH jain

  34. Kesavareddy 26. Jun, 2016 at 10:40 pm #

    nice and very valuable information shared. Thanks.
    Kesava

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