Understanding GST on Gold Loans Charges in HDFC Bank

11 April, 2025

Synopsis

• A complete guide to understanding GST and other charges on Gold Loans
• Gold Loans allow quick financing without extensive credit checks and documentation. All you have to do is pledge your gold jewellery where you get access to instant funds against them.
• This article explores some common Gold Loan charges, including the Goods and Services Tax (GST), to help you make an informed decision.

GST is one of the most common charges levied on Gold Loans in India. It is an indirect tax levied by the Government of India on the supply of various goods and services. And being a financial service, Gold Loans are subject to the GST. However, it is crucial to note that the GST on Gold Loans is not applicable on the loan amount but on certain charges associated with Gold Loans.

Other Charges on Gold Loans in HDFC Ban

Apart from the GST, numerous other charges are applicable to Gold Loans. However, unlike the GST - which is levied by the Government - these charges are levied by lenders. Hence, they are not fixed and may vary from one lending institution to another. Below are the Gold Loan charges that you should be aware of:

1. Processing fee

Most lenders will charge you a processing fee when you avail of a Gold Loan from them. This fee is levied to cover the administrative expenses incurred by the lender while processing and verifying your Gold Loan application.

HDFC Bank charges 1% as a processing fee in the Gold Loan.

2. Foreclosure charges

Lenders levy foreclosure charges when you wish to foreclose your Gold Loan account before the end of the agreed-upon tenure. This charge is also known as the pre-payment charge and is levied on the outstanding loan amount.

It’s crucial to inquire about the foreclosure charges before applying for a Gold Loan with a lender. At HDFC Bank foreclosure fee charges for Gold Loan at 1%.

3. Gold valuation fee

Lenders often charge a fee known as the gold valuation charge for assessing the value of the gold offered as collateral. They determine this value based on the weight and purity of the gold. HDFC Bank charges a fixed amount as the gold valuation fee based on the total amount offered.

HDFC Bank offers Gold Loans at highly competitive interest rates and negligible processing charges. Click here to learn more about HDFC Bank Gold Loan charges.

Disclaimer: * Terms & conditions apply. Gold Loan disbursal at sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.