How are Silver Rates Determined?
In India, the daily silver rate is heavily influenced by international silver prices (quoted in US dollars per troy ounce). Unlike gold, which is primarily driven by investment demand and central bank reserves, silver has massive industrial demand. Silver is a critical component in solar panels, electric vehicles (EVs), 5G electronics, and medical equipment. Because of this dual nature (precious metal + industrial commodity), silver is often more volatile than gold. Import duties set by the Indian government and the USD-INR exchange rate also play a major role in the final landing cost.
Fine Silver vs Sterling Silver
- Fine Silver (99.9% Pure): Often stamped as "999". It is the purest form of silver available. Because it is extremely soft and prone to scratching, it is mostly used for investment purposes in the form of bullion bars, biscuits, and coins.
- Sterling Silver (92.5% Pure): Often stamped as "925". It consists of 92.5% pure silver and 7.5% alloying metals (usually copper). The addition of copper provides the necessary strength and durability to craft intricate jewellery, utensils, and silverware.
Silver as an Investment
Investors traditionally buy physical silver in the form of coins (often 10g or 50g) and bars (100g or 1Kg) during festive seasons like Dhanteras and Diwali. Today, investors also gain exposure to silver through Silver ETFs (Exchange Traded Funds) and Silver Mutual Funds, which eliminate the need for physical storage and concerns about purity.
Taxes and Making Charges on Silver
When purchasing physical silver in India, the total price includes the base metal value, the jeweller's making charges (which can vary significantly depending on the craftsmanship), and GST. A 3% GST is levied on the total value of the silver, and an additional 5% GST is applied to the making charges.