How to Start a Jewellery Shop in India: Licences, Hallmarking, GST and the Real Profit Margin

Opening a jewellery shop looks like a respectable, stable business, and it can be. But the money works differently from most shops. Almost everything you invest sits in gold on your shelves, gold prices move every day, and the profit is a thin layer on top. Understanding that before you start is the difference between a long-running shop and a painful loss.

Where the money goes, and where it comes from

The money goes into stock. In June 2026 the average price of 22-carat gold was about ₹13,100 a gram. That means:

• 300 grams of stock is about ₹39 lakh.
• 500 grams is about ₹65.5 lakh.

The income comes from three places:

1. Making charges and wastage: the amount charged above the gold value. This is the shop's main source of profit.
2. Old-gold exchange: taking a customer's old jewellery towards a new piece. Testing the old gold's purity correctly decides whether this is profit or loss.
3. Gold price movements: when gold rises, your stock is worth more; when it falls, it is worth less. This is both an opportunity and a risk.

How thin is the margin?

Reliable figures for small shops are rare. A large listed chain gives a useful reference: Kalyan Jewellers reported revenue of about ₹35,700 crore and net profit of about ₹1,350 crore for 2025-26.

In other words, out of every ₹100 of jewellery sold, roughly ₹4 is left after all costs. Some online guides claim "10–20% margins" without any source; don't plan on that. A small shop's costs (rent, staff, buying price) differ from a big chain's, but the basic truth holds: large stock, thin profit.

Two worked examples

These use our own illustrative assumptions: 22-carat gold at ₹13,100 a gram and 8% making charges. Replace them with your town's rates.

Example 1: what a 5% fall in gold does to your stock

• Stock: 500 g × ₹13,100 = ₹65,50,000
• Selling 100 g a month at 8% making charges earns about ₹1,04,800 a month in making charges.
• If gold falls 5% in a month, the stock loses ₹3,27,500 in value.

A single month's fall can wipe out roughly three months of making-charge income. It is a paper loss that comes back if gold recovers, but until then your money is locked up and your margin is gone. That's why experienced jewellers buy stock carefully and don't overstock.

Example 2: how a bill adds up (10 g, 22 carat)

The chart above shows the same bill. Because it is under ₹2 lakh, PAN is not required and it may be paid in cash.

Licences and registrations

Get these ready before you open, roughly in this order:

1. PAN and a current account in the business's name (proprietorship, partnership or company).
2. Local trade licence from your corporation, municipality or town panchayat, and Shops and Establishments registration. Forms differ by place; check with your local body.
3. GST registration: whether it is mandatory depends on your turnover and whether you sell outside your state, but most jewellers register because buyers expect GST bills. Confirm thresholds with a CA.
4. BIS registration: every jeweller selling hallmarked jewellery must register with the Bureau of Indian Standards. It is done online, with no fee and no document upload, and is valid for life, subject to compliance. Display the registration certificate in the shop.

Hallmarking and HUID

Mandatory hallmarking now covers 385 districts, under the consolidated order of April 2026. In those districts, every gold piece sold must carry:

• the BIS logo,
• the purity (caratage and fineness), in the permitted grades of 14, 18, 20, 22, 23 and 24 carat,
• a six-character alphanumeric HUID (Hallmark Unique Identification).

Cost: BIS raised the hallmarking charge for gold to ₹75 per article in September 2026 (from ₹45), with a minimum of ₹200 per consignment. Silver is ₹35 per article.

Why it helps you sell: customers can check any HUID in the BIS Care app. Hallmarked stock is the cheapest way to build trust, and selling unhallmarked jewellery in a covered district invites penalties.

GST on jewellery

• Gold jewellery: 3% GST. For ready-made jewellery sold with making charges in the same bill, the whole value is generally taxed at 3%, as in the example above.
• Making charges billed separately, for example on custom-made orders: generally 5%.
• Job work, where a customer brings their own gold and pays only for making: generally 5% on the making charges.

The right treatment depends on how you sell and bill. Set up your billing software with a GST consultant from day one.

Cash and PAN rules

• Cash limit: a business must not receive ₹2 lakh or more in cash from one person in a day, for one transaction, or for one event. From 1 April 2026 this rule is section 186 of the Income-tax Act, 2025 (it was section 269ST under the old Act). The penalty falls on the shop and can equal the full cash received. Splitting a sale into several same-day bills does not avoid it.
• PAN: customers must quote PAN for jewellery purchases of ₹2 lakh or more, whether paid in cash or digitally. Those without PAN can give a declaration in Form 97 (it replaced Form 60 from April 2026).
• Simple rule for the shop: take large payments by UPI, NEFT, RTGS or cheque, and bill every sale.

Gold savings schemes: proceed with caution

"Pay 11 instalments, we pay the 12th" schemes are common. The risks:

• Instalments can be treated as deposits. Companies may accept advances against goods only if they are adjusted within 365 days, which is why most schemes run for 11 months. Beyond that, deposit rules and the Banning of Unregulated Deposit Schemes Act, 2019 can apply, with heavy penalties.
• If gold prices rise sharply or the shop struggles, customers' instalments become a large liability.
• A shop runs fine without a scheme. If you want one, design it with a lawyer and keep it within the rules.

Investment: work out your own number

There is no one figure that fits every town. Use this formula with your own numbers:

Total investment = gold stock + interiors and equipment + deposit and rent + licences and insurance + a reserve of at least six months' running costs

Stock is the largest part. 500 grams is only an example for a small shop; your town's size and customer footfall decide the right level. Equipment includes a digital weighing scale, purity-testing arrangement, safe, CCTV and billing software.

The main risks

• Gold price falls: the value of your stock drops (Example 1).
• Locked-up capital: unsold stock while rent, power and salaries continue.
• Purity and weight disputes: use an accurate scale, test old gold and sell only hallmarked pieces.
• Theft: insure the stock and invest in a safe and CCTV.
• Compliance mistakes: unhallmarked sales, cash-limit breaches or GST errors can bring penalties.

A 90-day plan

Final word

A jewellery shop is a business of trust and patience: large stock, thin margins, strict rules. Start with a stock level you can carry through a gold price fall, sell only hallmarked jewellery, follow the cash and PAN rules to the letter, and avoid savings schemes until you have legal advice. Done that way, the trust you build can keep a shop running for generations.

This guide is general information, not legal, tax or investment advice. Gold prices, GST treatment, hallmarking charges and tax rules change; the worked examples use our own assumptions. Confirm the current position with a chartered accountant and a lawyer before deciding.