Why Gold Rates Differ by City in India

The common base: one national landed cost

Gold arrives in India mainly through a few import hubs and is supplied by banks and nominated agencies to bullion dealers. The cost to them is the same everywhere: international price, converted to rupees, plus 6% customs duty (see gold import duty in India). GST is 3% in every state. So taxes do not create city differences; what is added after landing does.

Five reasons city rates differ

1. Local premium or discount

Bullion dealers in each market sell to jewellers at the landed cost plus or minus a premium that reflects local supply and demand. In a busy wedding or festival period they may charge a premium; when demand is weak they offer discounts below the duty-paid price. These conditions are not identical across cities on the same day.

2. Association and board rates

In many cities, a jewellers' or bullion association publishes a daily reference rate that member shops follow, and large chains publish their own board rates. Kerala is the best-known example: a state jewellers' association announces a daily rate that most shops display, which is why Kerala rates can move in steps and sometimes sit below neighbouring states. Nationally, the India Bullion and Jewellers Association publishes benchmark rates that are widely used as a reference, including for Sovereign Gold Bond pricing.

3. Transport, insurance and security

Moving gold from an import hub to a smaller city costs money for secure logistics and insurance. Per gram the cost is small, but it is one reason tier-2 and tier-3 city rates can sit slightly above metro rates.

4. Jeweller margin and timing

Each jeweller decides how much to add over its purchase cost and when to update its board. Some revise once in the morning; others revise again in the afternoon if the international market moves. Comparing a rate captured at 10 am in one city with a 4 pm rate in another can show a gap that is really a time difference.

5. Competition and business model

Cities with many large chains and high volumes, such as Chennai, Coimbatore and Thrissur, tend to have tight pricing. Some chains price gold close to cost and earn their margin through making charges, while smaller shops may do the reverse. A low board rate does not always mean a lower bill.

Why South Indian rates look different

South India buys a large share of the country's jewellery, mostly 22K, and quotes in grams and in sovereigns (8 g) or pavan. Rates published in Chennai, Kerala, Bengaluru and Hyderabad are usually 22K-first, while north Indian boards often lead with 24K per 10 grams. High volume and strong competition keep the gap to the landed cost narrow. Wastage or VA, common in the south, makes the board rate a smaller part of the final price; see making charges explained. City pages: Chennai, Kerala, Bengaluru, Mumbai, Delhi.

What no longer causes differences

Before GST, local taxes such as octroi in Mumbai and local body tax in some Maharashtra cities, plus differing state VAT rates, made gold genuinely costlier in some places. GST, introduced in July 2017, replaced these with a uniform 3% rate, so any city gap today comes from market factors rather than tax.

How much the difference is worth

City gaps are usually small compared with differences in making charges. Suppose you buy 40 g of 22K jewellery. A board rate ₹50 per gram higher costs 40 × ₹50 = ₹2,000. At an illustrative 22K rate of ₹12,250 per gram the gold value is ₹4,90,000, and a making charge just 2 percentage points higher costs 2% × ₹4,90,000 = ₹9,800, almost five times as much. Travelling to another city for its board rate rarely pays; negotiating the making charge usually does.

How to compare fairly

• Compare rates for the same karat and unit (22K per gram vs 22K per gram, not 24K per 10 g).
• Check the time each rate was published.
• Compare final bills, including making, stones, hallmark fee and 3% GST, using the jewellery price calculator.
• Use the live India gold rate as the neutral reference: a board well above it deserves a question.