The short answer
Old gold is valued on its net gold weight multiplied by its tested purity and the day’s gold rate, minus any deductions. Stones, enamel, wax and lac are not gold and should be removed from the weight. Exchange for new jewellery usually gets a better rate than a cash sale, but you then pay making charges on the new piece. A hallmark, an old invoice and testing done in front of you all make the process fairer. Get the purity, weight, rate and deductions in writing before you agree.
Selling versus exchanging
| Selling for money | Exchanging for new jewellery | |
|---|---|---|
| What you get | Payment, usually by bank transfer | Credit against a new purchase |
| Typical deductions | Often higher | Often lower, to encourage a new purchase |
| Other costs | None | Making charges and GST on the new piece |
| Good when | You need money, or want to keep options open | You were going to buy new jewellery anyway |
Compare the final amount you receive or save, not only the advertised rate.
Step 1: How purity is tested
- XRF (X-ray fluorescence) testing. A machine reads the surface composition in a few minutes without damaging the piece. It is fast and widely used, but it reads the surface, so plating or a gold-rich surface can affect the result.
- Touchstone (rubbing) testing. A streak of the piece is compared with known standards. It depends on the tester’s skill.
- Melting (fire assay). The most accurate method, but it destroys the piece. It is normally used only after you have agreed to sell.
Ask for the test in front of you and ask for the printed result. If the result is much lower than the purity marked or invoiced, ask why, and consider a second opinion.
Independent testing. Consumers can have jewellery tested at a BIS-recognised Assaying and Hallmarking Centre for a small fee. A test report from an independent centre gives you a reference figure before you negotiate.
Step 2: How weight is measured
- Gross weight is the whole piece.
- Net gold weight is gross weight minus stones, beads, enamel, lac, wax filling, threads and other non-gold parts.
Watch the scale, which should be calibrated and visible. Ask how the non-gold weight was estimated. For pieces with wax- or lac-filled hollow sections, which are common in traditional jewellery, the gold content can be much lower than the gross weight suggests.
Step 3: The rate and the calculation
The buyer will usually quote the day’s rate for 24K, 22K or both. The value is calculated as:
Value = net gold weight × (tested purity ÷ 24K purity) × 24K rate, minus deductions
Or, more simply, if the buyer quotes a rate for the tested purity: net weight × rate for that purity, minus deductions.
A worked example
| Item | Figure |
|---|---|
| Gross weight | 20.00 g |
| Stones and lac removed | 2.00 g |
| Net gold weight | 18.00 g |
| Tested purity | 91.6% (22K) |
| Example 22K rate | ₹9,000 per gram |
| Value before deductions | 18 × 9,000 = ₹1,62,000 |
| Deduction (example 2%) | ₹3,240 |
| Amount offered | ₹1,58,760 |
The rate here is only an example. Use the actual rate on the day, and compare it with the rate shown by more than one jeweller.
Deductions: what is fair
Buyers deduct for refining costs, metal loss and their margin. Deductions vary between jewellers and between sale and exchange.
- Ask for the deduction as a percentage and as an amount in rupees.
- Ask whether the deduction is applied to weight, purity or value. Deducting twice (for example, lowering both purity and weight) adds up quickly.
- Some jewellers apply lower deductions on their own hallmarked jewellery sold with a bill. Keep invoices for this reason.
What hallmarks and invoices change
- A BIS hallmark with HUID records the declared purity. You can check it in the BIS Care app. This gives you a strong reference point for the purity you should be paid for.
- An original invoice shows what you paid, the purity and the weight, and may set out the jeweller’s own buy-back or exchange terms.
- Old, unhallmarked jewellery can still be sold or exchanged. Purity will be decided by testing, so independent testing is especially useful here.
Tax basics
- Gains on selling gold jewellery are capital gains. Since 23 July 2024, gold held for more than 24 months is treated as long-term and taxed at 12.5% without indexation. Gains on gold held for a shorter period are added to your income and taxed at your slab rate.
- For inherited jewellery, the holding period and cost of the previous owner generally apply.
- Keep invoices, valuation reports and bank statements as records.
- Tax rules change. Check the current rules or ask a chartered accountant before filing.
This is general information, not tax advice.
Checklist: before you sell or exchange
- Note what you have: pieces, hallmarks, HUIDs, invoices
- Check HUIDs in the BIS Care app
- Optional: get an independent purity test
- Check the day’s gold rate from more than one source
- Ask two or three jewellers for written quotes
- Watch weighing and testing in person
- Get net weight, purity, rate and deductions in writing
- Prefer payment by bank transfer, with a receipt
- For exchange: compare the full price of the new piece, including making charges and GST
Red flags
- Testing or weighing done out of sight.
- A purity result far below the hallmark, without explanation.
- Refusal to give the calculation in writing.
- Pressure to decide immediately, or a rate that is only valid “right now”.
- Large deductions described vaguely as “loss” or “melting charges”.
FAQ
Will I get the full market rate? Usually not. Expect a deduction. Compare the final amount between buyers.
Is exchange always better than selling? Exchange often gives a better rate, but you pay making charges and GST on the new piece. Compare the total.
Can I sell jewellery without a bill? Yes, usually with identity proof. Purity will be decided by testing, and the deduction may be higher.
Should I remove the stones first? You can ask for them to be removed and returned. Stones are generally not paid for at gold rates.
Does XRF damage jewellery? No. It is non-destructive.
Next steps
Read our gold jewellery guide on karat, hallmarks and making charges, browse more Gold Jewellery articles, or email us.