HSN Code and GST for Silver and Gold Leaf

Buyers ask us for this often enough — usually the accountant rather than the buyer — that it is worth setting down plainly. This is the classification we use on our own invoices and the reasoning behind it. It is not tax advice, and the last section explains why you should still put it to your own CA.

The codes

Silver leaf (vark, chandi ka varak): HSN 7106, GST 3%.

Chapter 71 covers precious metals. Heading 7106 is silver, unwrought or in semi-manufactured forms, or in powder form. Beaten leaf is a semi-manufactured form of silver, and silver chura and dust fall under the same heading as powder.

Gold leaf (sona ka varak): HSN 7108, GST 3%.

The same structure applies one heading along: gold, unwrought or in semi-manufactured forms, or in powder form.

At 3%, both sit at the precious-metals rate rather than at any food rate.

Why not a food code

This is the part people get stuck on, and it is a reasonable place to get stuck. Vark is sold to be eaten, so Chapter 21 — miscellaneous edible preparations — looks like it ought to apply.

The classification follows what the goods are, not what they are for. Vark is silver that has been beaten thinner. It has not been compounded with anything, no other ingredient has been added, and it is not a preparation in the sense Chapter 21 uses. It leaves our premises as silver in a semi-manufactured form, which is what heading 7106 describes.

A coated product is a different matter. Silver-coated elaichi is cardamom with silver on it, and the cardamom governs — that is a food classification, not 7106. The line falls at the point where the silver stops being the whole of the goods.

On an invoice

For a straightforward supply of silver leaf, an invoice would carry the description, HSN 7106, quantity, taxable value, and CGST plus SGST at 1.5% each within the state or IGST at 3% inter-state. Gold leaf the same, at 7108.

Since precious metals move with bullion, our own invoices state the rate the price was struck at. That is not a GST requirement. It is so that a buyer comparing two invoices three months apart can see why they differ.

Take this to your CA anyway

Two honest caveats.

Classification is decided on the facts of the specific goods, and yours may not be identical to ours — a coated, compounded or blended product can land somewhere else entirely, as the elaichi example shows. And rates and notifications change; anything you read on a supplier's website has a date on it whether or not it is printed.

What we can commit to is our side of it: we will state the HSN code we have applied on every invoice we issue, and we will tell you the basis if you ask. If your CA reaches a different conclusion for your goods, theirs is the one to follow.