How old gold exchange is valued

What the shop checks first

When a customer brings old gold to the counter, two numbers decide what it is worth: how much gold there is, and how pure it is. Weight is quick; purity needs a test.

Weigh the piece in front of the customer, on a scale they can see, and write down the reading before anything is removed or tested. BIS’s guidelines for testing a consumer’s old gold at an assaying and hallmarking centre ask for exactly this: the jewellery is weighed in the presence of the consumer. Do the same at your counter.

Then look at the piece. A hallmark tells you the purity it was certified at when it was made. Many old pieces carry no hallmark, or only a shop’s own stamp, and BIS’s consumer FAQ says plainly that old jewellery cannot be hallmarked. For those pieces, a test is the only way to know the purity today.

How purity is tested

Three methods are in use.

Touchstone. The piece is rubbed on a dark stone to leave a streak, and streaks from test needles of known purity are made beside it. Acid goes on, and the tester compares how the streaks react. It is fast and needs no machine, but it rests on the tester’s eye and experience. In Outlook Business, Keyur Shah calls it the traditional method in the market, and a subjective one that the customer can’t easily follow.

XRF. An X-ray fluorescence machine reads the metals in a piece in moments, without harming it. BIS describes XRF as a non-destructive, preliminary method that gives the gold content of the surface only, which may or may not represent the average purity of the article. BIS also says a purity certificate cannot be issued on an XRF reading alone. That matters for old jewellery: BIS notes that 24 carat plating of low-caratage articles is common.

Fire assay. This is the method in IS 1418 (cupellation, or fire assay), and BIS centres do not certify purity on an XRF reading alone. A small sample, around 300 to 500 mg, is scraped, drilled or cut from the piece and assayed in a furnace, which leaves a cornet of pure gold. BIS calls it destructive, but the most widely used and accurate method for gold content globally. The cornet and any remnants go back to the customer.

If a customer doesn’t accept your reading, they can take the piece to a BIS-recognised centre. Under the BIS guidelines, the centre checks each piece by XRF, can fire assay a sample with the customer’s consent, and issues a report with the piece’s photograph and weight.

Why gross weight isn’t the weight paid for

The scale shows gross weight: the gold and everything else. In old jewellery, everything else can add up. There may be stones and beads, lac or wax inside a hollow piece, thread, and the dirt of years in the crevices. None of it is gold, so it comes off before the piece is valued. The BIS guidelines ask a testing centre to note in its report if a piece looks hollow, wax filled or made of mixed metals.

Solder is harder to see. BIS’s brief on hallmarking points out that Indian jewellery often has many soldered joints of much lower caratage than the rest of the piece.

Remove stones with the customer watching, and give them back unless you have agreed to buy them. Write gross weight, the weight removed and net weight on the voucher, as three separate lines.

Deductions, and why they vary

Once you have the net weight and the purity, most shops take a deduction before they arrive at a value. In Outlook Business, Keyur Shah names melting loss and caratage conversion as costs that sellers meet in exchanges, and says service charges should be disclosed to the customer beforehand. No source cited here sets a figure, so it differs from shop to shop.

What keeps a deduction fair is showing it. Print it as a percentage and in rupees, on the voucher, before the customer agrees. Here is one way to work out a value, with an example rate and deduction:

Line	How it is worked out	Amount
Gross weight	As the scale shows	20.400 g
Less stones and thread	Weighed after removal	0.400 g
Net weight	Gross less removed	20.000 g
Fine gold	20.000 g × 900 parts per thousand (tested)	18.000 g
Gold value	18.000 g × ₹7,800/g	₹1,40,400
Deduction 2%	2% of ₹1,40,400	₹2,808
Old gold value		₹1,37,592

The ₹7,800 a gram rate for fine gold and the 2% deduction are examples only, not today’s rate or a suggested charge. However you work it out, print the method so the customer can follow it.

Exchange against a new piece, or cash

The customer can take that value in two ways: as part payment for a new piece, or paid out. In an exchange, the old gold value comes off the bill for the new piece.

• The old gold you buy. In a press release of 13 July 2017, CBIC said that an individual selling their own old jewellery is not doing so in the course of their business, so it is not a supply, and the jeweller does not pay tax on it under reverse charge. Since 1 February 2019, section 9(4) of the CGST Act applies only to the classes of registered buyers and categories of supply that the government notifies. Ask your CA about anything other than a customer selling their own jewellery.
• The new piece you sell. Jewellery carries 3% GST. Rule 27 of the CGST Rules values a supply paid for partly in kind at its open market value, and its illustration is a new phone sold with an old phone in exchange: the value is the price of the new phone without the exchange. The rule does not mention gold, and how GST falls on an exchange can depend on how it is recorded. Agree the treatment with your CA before you bill one.

Continuing the example, with GST charged on the full value of a new piece whose taxable value is ₹1,60,000 (use whichever treatment your CA confirms):

Line	Amount
New piece, taxable value	₹1,60,000
GST 3%	₹4,800
Bill total	₹1,64,800
Less old gold value	₹1,37,592
Balance to pay	₹27,208

If the new piece is hallmarked, BIS asks that the bill also show the hallmarking charge. The example leaves it out for simplicity.

Keep a voucher for every purchase

Every piece of old gold you take in should have a purchase voucher, whether you pay cash for it or set it against a bill. Put the date, the customer’s name and phone number, a description of each piece, the gross weight, what was removed, the net weight, the test method and reading, the rate, the deduction and the value. Note whether it was paid out or set against a bill, and which bill. Give the customer a copy.

The customer then has a record of what they handed over, and you have a record of where your old gold came from.

In 24Gold, old gold comes in on a purchase voucher, printed on A4 or A5, and can be set against a sale as an exchange. Each voucher keeps a timeline of what happened to it, and the Old Purchase Report and Day Summary show what came in each day.

Rules as published on 16 October 2026. How GST applies to an exchange can depend on how the transaction is recorded. Check your own case with your CA.