Buying Gold Before Dhanteras: Hallmarking, Making Charges and Buyback Terms

The queue outside a jewellery shop on Dhanteras eve moves fast, and jewellers know it. Decisions that should take an hour get made in ten minutes, and the three line items that determine whether a gold purchase is a good one, hallmarking, making charges, and buyback terms, get skimmed or skipped entirely. None of them is complicated. All of them matter.

The Bureau of Indian Standards runs India's gold hallmarking system, and since June 2021 hallmarking has been mandatory for 14, 18, and 22 karat gold jewellery sold by registered jewellers. A hallmarked piece carries a six-digit alphanumeric code called the HUID, Hallmark Unique ID, which you can verify on the BIS Care app by entering the code. The app tells you the purity, the assaying centre that tested it, and the jeweller's registration number.

Purity is stamped as a three-digit fineness number: 999 for 24 karat, 916 for 22 karat, 750 for 18 karat, 585 for 14 karat. If a jeweller shows you a piece marked 916 and describes it as pure gold, they are either confused or hoping you are. Pure gold is 999. A 916 piece is 91.6% gold alloyed with copper or silver to make it hard enough to wear. That alloying is standard and fine, it is what most Indian jewellery is, but the distinction matters when you compare prices across shops.

One practical step: photograph the HUID before you buy and verify it on BIS Care before you pay. The verification takes under a minute and costs nothing.

Making charges are the fee for converting raw gold into a finished piece. They are calculated either as a flat rupee amount per gram or as a percentage of the gold's value on that day. The percentage model is the one to watch, when gold prices rise, your making charge rises with them even though the labour involved in crafting the piece did not change.

Making charges vary sharply by jewellery type. Plain gold bangles or chains typically carry lower charges, often in the range of 8% to 14%, while intricate temple jewellery, filigree work, or kundan pieces can carry charges of 25% and above. Branded jewellers tend to charge more than local karigars for comparable workmanship. Neither is automatically wrong, but you should know what you are paying for before you commit.

Ask for the making charge to be stated as both a rupee amount and a percentage of that day's gold rate, in writing on the estimate slip. Some jewellers quote a low per-gram charge but calculate it on a higher internal gold rate than the market rate. Checking both numbers catches that gap. The GST structure adds 3% on the gold value and 5% on making charges, so a high making charge compounds into a meaningfully larger bill.

A gold purchase is also a future transaction. At some point you will sell, exchange, or pledge the piece, and the terms on which the jeweller will take it back determine what the jewellery is actually worth to you over time.

Most jewellers offer buyback at the prevailing gold rate on the day of return, but with deductions. The making charges you paid are rarely returned, they are treated as a service fee, not a recoverable cost. Some jewellers deduct a further 2% to 5% as a handling or melting charge. A few offer exchange credit rather than cash, usable only toward a new purchase in the same store. None of this is hidden, but it is rarely volunteered.

Before you buy, ask three questions: What percentage of the prevailing gold rate will you pay on buyback? Are making charges recoverable at all? Is buyback in cash or store credit only? Get the answers in writing on the purchase receipt or in a separate note on the shop's letterhead. A jeweller who refuses to put buyback terms in writing is telling you something about what those terms will look like when you return.

For coins and bars, buyback terms are generally more transparent than for jewellery, because there are no making charges to argue about and purity is unambiguous. If your Dhanteras purchase is primarily an investment rather than an ornament, a BIS-hallmarked coin from a bank or a Sovereign Gold Bond is worth comparing against jewellery on a pure return basis.

Check the gold rate the jeweller is using against the India Bullion and Jewellers Association rate for that day, it is publicly available and updated daily. The jeweller's rate should be close. A significant gap is worth asking about.

Weigh the piece on the jeweller's scale and note the weight on the bill. The bill should state the net gold weight, the making charge amount, the GST breakout, and the HUID. If any of these is missing, ask for it to be added before you sign. A complete bill is also your only reliable document if you need to make an insurance claim or dispute a buyback valuation later.

Chanakya's Arthashastra addresses the regulation of gold merchants and the testing of gold purity as a function of state oversight, the principle that the buyer needs a verifiable standard to transact fairly is not new. The BIS hallmarking system is the current version of that standard. Use it.