Selling old gold — how the price is worked out and what gets deducted

Old gold is bought for its metal. Whatever was paid for the design, the making charge and the shop’s margin when the piece was new is not part of its price now. What a buyer pays is a simple product — grams of gold × the day’s rate for that purity — minus whatever the buyer deducts. Knowing each term is the whole trick.

1. Purity

The buyer first establishes how much of the piece is gold. A BIS hallmark settles it: 22K916 is 91.6% gold, 18K750 is 75%. An unhallmarked piece is tested — with a touchstone and acids, an electronic karat meter, or an XRF machine that reads the alloy without damaging the piece. Insist on seeing the result. If a shop’s test says a hallmarked piece is lower than its mark, the piece can be tested elsewhere; a hallmark with a HUID can also be looked up in the BIS Care app.

2. Net weight

The piece is weighed, and stones, enamel, lac filling and any threads or non-gold parts are deducted. For stone-set jewellery the stones are usually removed or their weight estimated; a buyer who weighs a stone-set bangle gross and pays for the stones as gold is being generous, and one who deducts generously for stones is being less so. Ask for the gross weight, the deduction and the net weight as separate figures.

3. The rate

The buyer applies a rate per gram for the purity found. The reference is the IBJA rate for that fineness — the same benchmark the gold pages on this site show for 24K, 22K and 18K. Buyers quote at or below the benchmark; the gap is their margin. Comparing two buyers means comparing their rate per gram for the same purity on the same day, nothing else.

4. Deductions

Common deductions are a percentage for melting loss or refining, a charge for testing, and a lower rate for unhallmarked or low-purity pieces. These vary widely between shops and are the main reason quotes differ. Some buyers quote a clean rate with no deduction; others quote the benchmark and deduct afterwards. Only the final amount per gram of net weight is comparable.

Selling versus exchanging

Selling means cash (or a bank transfer) for the metal at the buyer’s rate. Exchanging means handing the old piece over against a new one: the old gold is valued the same way, and the value is set off against the new bill. Shops often offer better terms on exchange than on an outright sale — a smaller deduction, or the benchmark rate — because the new piece carries a making charge and margin. Whether exchange is the better deal depends on whether you wanted the new piece anyway; the jeweller’s bill guide explains what the new bill will carry.

Paperwork that helps

• The original bill: it records the purity and net weight the piece was sold at.
• The hallmark: it saves the purity test, and a HUID can be verified.
• Your own ID: buyers record it for purchases above their thresholds, and a bank transfer leaves a trail.

A piece without a bill or hallmark can still be sold; it is simply valued by test, and the test decides.

The tax side

Gold is a capital asset. A profit on selling it — the sale price less what it cost — is a capital gain, taxed under the Income-tax Act according to how long the gold was held and the rules in force in the year of sale. The rules and the rates have changed over the years, so check the current position on the Income Tax Department’s portal or with a tax adviser rather than relying on memory; inherited or gifted gold has its own rules for cost and holding period. A buyer’s deduction of tax at source, where it applies, is shown on the payment.

Nothing here tells you whether to sell. It tells you how to read a quote: purity, net weight, rate, deductions — and to compare only the last number per gram.