How to start a gold buying business in India, the complete 2026 guide

What a gold buying business actually is

A gold buying business, the trade most people know as cash for gold, purchases old gold jewellery, coins and bars from individual sellers, tests the purity, pays the seller, then sells the aggregated gold onward to refiners. You are not a jeweller, you are the reverse of one. A jewellery shop sells gold to consumers. You buy it from them. And unlike a gold loan company such as Muthoot or Manappuram, which lends money against pledged gold, you take full ownership. The seller walks out with money in the bank. You walk out with grams.

Why does this trade exist at all? Because India's 27,000 tonnes of household gold mostly sits idle. Wedding sets nobody wears, a grandfather's coins, a broken chain in a Godrej locker. Only around a fifth of it has ever touched the financial system. When a family needs funds for a hospital bill, a business, a down payment or a daughter's admission, that idle gold is the fastest asset to convert. Your counter is where that conversion happens, and how honestly it happens decides whether the seller sends her sister to you or warns the whole street.

The market splits into three camps. Organised chains such as Attica Gold, White Gold and IMG Gold Buyers run branded branches with visible purity testing machines and digital payouts. Gold loan NBFCs dominate gold mindshare with thousands of branches but lend rather than buy outright. And the unorganised local saraf still handles most volume in smaller towns, usually with no standard testing and wider, quieter margins. The opportunity for a new entrant is exactly that gap: the seller who does not trust the saraf and finds the big chains intimidating wants a transparent, local, professional buyer. That is the business you are starting.

How a gold buying transaction works, counter to refinery

Every well-run counter follows the same six movements. A seller should be able to walk in nervous and walk out paid in under 30 minutes, with every step done in front of her eyes. Here is the full flow, and why each step matters.

1. KYC before anything else. Collect identity proof (Aadhaar, PAN, passport, voter ID), a live photo, and a signed declaration that the seller owns the gold. PAN is mandatory for transactions above ₹2 lakh. This paperwork is not bureaucracy, it is the wall between you and a stolen-property charge, and it is what makes your stock sellable to refiners later.
2. Purity testing, in front of the seller. The gold piece goes into the testing machine, ideally an XRF (X-Ray Fluorescence) analyser, which reads purity non-destructively in 2 to 3 minutes. No acid scratches, no drama, and the karat reading appears on a screen the seller can see. This single act of transparency is why organised buyers beat the local saraf on trust.
3. Weighing on a stamped scale. The gold is weighed on a precision balance verified and stamped by the Legal Metrology Department. Weigh everything together first, then separately where stones, enamel or wax fillings must be excluded from the gold weight. The seller watches the display.
4. Price from a published rate. Quote from the day's IBJA (India Bullion and Jewellers Association) rate for the tested purity, minus your margin. Transparent buyers display the rate on a board. The seller can check the same rate on her phone, so honesty here costs you nothing and earns you everything.
5. Payment, preferably by bank. If the seller accepts, pay immediately by IMPS, NEFT or UPI. Bank transfer keeps you on the right side of the income tax cash limits and the PMLA cash threshold, both covered below, and gives the seller proof she can show her family. Issue an itemised receipt.
6. Aggregate, hold, then sell to the refinery. Purchased gold accumulates at the counter, passes a written hold period with a check against any police notices (the law on this is sharper than most new buyers realise, see the compliance stack), and is then sold to a refinery. The refinery assays it, processes it into bullion and settles in roughly 7 to 14 days. The gap between what the refinery pays you and what you paid the seller is your gross margin.

Notice what the flow really is: a trust machine. Every step either builds the seller's confidence or quietly builds your legal file. Skip a step to save five minutes and you eventually pay for it in walkouts, disputes or worse.

Margins, working capital and the float

Now the part franchise brochures whisper and we will say plainly. Gold buying is a thin-margin, high-volume trade. The percentages are small, the absolute rupees are decided entirely by how many grams cross your counter.

Gold rates move daily, so for the worked numbers below assume ₹9,000 a gram for 22K. Swap in today's IBJA rate when you read this, the percentages hold either way.

• Gross margin: 0.8 to 1.5 percent per gram. That is the spread between the refinery's settlement and your payout to the seller. At ₹9,000 a gram, that is ₹72 to ₹135 per gram. Unorganised buyers take 2 to 8 percent, which is exactly why sellers are migrating to transparent counters.
• Operating costs: roughly 0.5 to 0.8 percent. Rent, staff, electricity, CCTV, the XRF machine (₹5 to 8 lakh for a good unit), the verified balance, insurance and compliance. A single counter typically needs ₹2 to 4 crore a month of purchase volume to break even comfortably.
• Net margin: 0.3 to 0.7 percent per gram. At ₹9,000 a gram, that is ₹27 to ₹63 net per gram. A counter buying ₹3 crore a month, roughly 3,300 grams at our assumed rate, nets somewhere between ₹90,000 and ₹2,10,000 a month before tax. Honest money, but only at volume.
• The float, your real boss. You pay the seller today. The refinery pays you in 7 to 14 days. That gap is working capital you must fund. A counter buying ₹3 lakh a day needs ₹20 to 40 lakh rotating in the float at all times, and the requirement doubles in festival season precisely when you least want to turn sellers away. Most chains bridge it with credit lines against their aggregated stock. Budget the float before you budget the interiors.

Put together, a realistic single-counter launch budget lands around ₹20 to 50 lakh: deposit and fit-out, testing machine, stamped balance, CCTV, registrations, plus the float. Franchise routes quote ₹15 to 40 lakh all-in and trade some margin for brand and process. Either way, the maths rewards the operator who treats working capital with respect and Dhanteras with reverence.

Karnataka licences and compliance, the full stack

Ask five people what licences a gold buyer needs and you will get five confident, contradictory answers. One says a national gold licence exists (it does not), one says nothing is needed (very much not), and three will sell you their consulting package on the spot. Meanwhile the actual rules sit scattered across the labour department, the municipal corporation, the GST portal, the Income Tax Act, the PMLA and the Karnataka Police Act, and the cost of missing one ranges from a fine to, in one specific case, three years in jail.

So here is the whole stack in one place, researched for Karnataka with Bengaluru first, each item with what it is and where to apply.

1. Business entity, PAN and current account

What it is: the legal foundation every registration below asks for: a sole proprietorship, partnership, LLP or private limited company, with PAN and a current account. A proprietorship is fastest for one counter; a private limited company reads better on a multi-branch brand. Where to apply: company or LLP at mca.gov.in; a proprietorship needs no separate incorporation, the GST and shop registrations effectively establish it. Ask a CA which form fits your planned volumes.

2. GST registration

What it is: mandatory tax registration once turnover crosses ₹40 lakh for goods, a line a gold buyer crosses within weeks at current prices, so treat it as a day-one requirement. Gold is taxed at 3 percent (HSN 7108/7113) and making charges at 5 percent. Where to apply: online at gst.gov.in, no government fee, GSTIN usually in 7 to 10 working days.

One detail worth its weight: the margin scheme. Buying old gold from an unregistered individual attracts no GST on the purchase, and if you resell that gold without changing its form (cleaning and polishing are fine), GST applies only on your margin under Rule 32(5) of the CGST Rules, confirmed for Karnataka in the Aadhya Gold advance ruling. Melt it into bullion and the scheme is generally lost, with GST on full sale value. Whether you melt or resell as-is is therefore a tax decision, not just an operational one. Verify your exact flow with a CA.

3. Shop and establishment registration, the famous Form C

What it is: registration of your shop under the Karnataka Shops and Commercial Establishments Act, 1961, required within 30 days of starting business. The certificate the labour department issues is called Form C, so "Form C registration" and "shop and establishment registration" are the same thing, one fee, one certificate, display it on the wall. Where to apply: online on the e-Karmika portal of the Karnataka Labour Department (also reachable via Seva Sindhu). Fees scale with headcount: ₹405 with no employees, ₹810 for 1 to 9, ₹5,400 for 10 to 19, ₹13,500 for 20 to 49. Often issued within 1 to 2 working days, valid 5 years.

4. Trade licence, which in Bengaluru means BBMP permission

What it is: the municipal licence to carry on a specific trade at specific premises. Inside Bengaluru, "trade licence" and "BBMP permission" are the same approval, issued by BBMP under its trade category schedule; in other Karnataka cities the city municipal council issues the equivalent. Apply 30 days before opening. Where to apply: via bbmp.gov.in (the application system runs at trade.bbmpgov.in); outside Bengaluru, your local municipal body.

Two Bengaluru-specific notes. First, a pure gold buying office is not clearly named in the public trade category lists, so confirm the correct category in writing at your BBMP zonal office; getting the licence anyway is the low-risk path. Second, BBMP requires signboards to be at least 60 percent Kannada and has tied licence renewals to photographic proof. Design the shopfront accordingly, not as an afterthought.

5. Legal Metrology, the stamped weighing scale

What it is: every weighing instrument used for trade must be verified and stamped by the Legal Metrology Department before use, and re-verified periodically (generally every 24 months). Using an unverified scale is an offence under the Legal Metrology Act, 2009, and your balance is the single most scrutinised machine in the shop. Where to apply: Karnataka's e-Mapan portal (emapan.karnataka.gov.in). Check the approved model list with the department before you buy the balance, not after.

6. PMLA, KYC and FIU-IND obligations

What it is: under the Prevention of Money Laundering Act, dealers in precious metals become reporting entities when cash transactions reach ₹10 lakh, single or linked, and the official guidance explicitly covers a dealer paying cash for old jewellery. Reporting entities must register with FIU-IND, appoint a principal officer, run customer KYC and file transaction reports. Where to apply: the FIU-IND FINnet portal, if your cash pattern triggers it. The practical launch answer: pay sellers by bank transfer, keep cash small, and you stay outside the trigger while building the audit trail refiners want anyway. Confirm your projected pattern with a CA.

7. Income tax cash rules

What it is: three separate rules that quietly make the literal "cash" in cash for gold a bad idea above small amounts. Receiving ₹2 lakh or more in cash for one transaction is barred under Section 269ST. Cash business payments above ₹10,000 per person per day risk disallowance as expenditure, which for a gold buyer can mean losing the deduction on stock itself. And PAN is mandatory for transactions above ₹2 lakh under Rule 114B. Where it lives: no application, just policy: bank transfer as the default payout, decided with your CA before the first purchase, including how these sections are renumbered under the new Income Tax Act regime.

8. Karnataka Police Act duties, the section nobody tells you about

What it is: there is no dedicated second-hand gold dealer licence in Karnataka, but Sections 98 to 101 of the Karnataka Police Act, 1963 bind every dealer in second-hand property and worker in metals, which is you twice over. Possessing property reasonably believed stolen without a satisfactory account is punishable. Once police serve notice about suspected stolen property, you must report any matching item offered to you, and melting or altering such property after notice, without police permission, carries up to three years imprisonment. For a business that melts stock for refiners, that is the sharpest criminal provision in this entire stack. Where it lives: no application; build a written no-melt hold window with a check for police notices before any lot is melted, and ask your lawyer and the local station whether any city police orders add conditions in your area.

9. Pawnbroker and money lender licences, only if you lend

What it is: the Karnataka Pawnbrokers Act, 1961 and Karnataka Money Lenders Act, 1961 require licences to take gold as pledge against a loan or to lend money. Outright purchase, where title transfers, needs neither. But "release your pledged gold" services, which many buyers advertise, can amount to lending depending on structure. Where to apply: the district Deputy Registrar of Co-operative Societies (the state lists fees around ₹5,000 for money lending and ₹2,500 for pawn broking per five-year term, plus deposits). If you plan anything pledge-shaped, take legal advice first.

10. Professional tax

What it is: Karnataka's small but mandatory levy: the business enrols and pays ₹2,500 a year, and once you have employees earning above ₹25,000 a month you deduct ₹200 monthly from each (₹300 in February, because Karnataka likes February). Where to apply: ptax.karnataka.gov.in.

11. Udyam (MSME) registration

What it is: free, optional registration that unlocks MSME benefits, bank credit comfort and a subsidy on ISO certification costs. Ten minutes well spent. Where to apply: udyamregistration.gov.in.

12. EPF and ESI, for when you grow

What it is: central registrations that switch on with headcount: ESI at 10 or more employees (covering staff earning up to ₹21,000 a month), EPF at 20 or more. Irrelevant for a one-counter launch, mandatory before a multi-branch buildout. Where it lives: verify thresholds with your CA at hiring time.

13. ISO 9001 certification, the trust badge

What it is: not a government registration at all, despite what certificate mills imply. ISO 9001 is voluntary certification of your quality processes by a private body, legally required by nobody and commercially useful to a trade built on trust. Do it after operations stabilise. Where to apply: through a certification body accredited by NABCB, never an unaccredited mill. Small-business costs start around ₹15,000 to ₹35,000, with MSME subsidy support available, and the cycle runs three years with annual surveillance audits.

BIS and purity basics, what you must know before the first gram

Here is the distinction that trips up half the new entrants: BIS hallmarking rules govern what you sell, not what you buy. Buying old gold from consumers requires no BIS registration, and you may buy back old, even un-hallmarked, jewellery freely. BIS jeweller registration (free, instant, lifetime, on nsws.gov.in) becomes mandatory only the moment you sell hallmarked gold articles to consumers, and in a mandatory hallmarking district such as Bengaluru Urban, resold jewellery must carry the 6-digit HUID, with old pieces re-hallmarked before sale.

Which points at the cleanest starter model: buy old gold from the public, sell as scrap or melt to licensed refiners, never retail to consumers. Bullion is exempt from the hallmarking order, only BIS-licensed refineries may hallmark it, and your BIS obligations stay at zero. The moment your model drifts toward reselling jewellery across the counter, the BIS switch flips. Know which side of that line you are standing on, and confirm it with a CA before crossing.

On purity itself, the working vocabulary is short. 24K is pure gold, 22K is 91.6 percent (the 916 stamped on most Indian wedding jewellery), 18K is 75 percent. Hallmarked pieces carry the BIS logo, the purity grade, the assaying centre mark and the HUID. Your XRF machine reads actual purity regardless of stamps, which matters because decades-old jewellery often tests below its claimed karat, and your price quote must follow the machine, stated plainly to the seller, not the stamp. The buyers who explain that difference politely are the ones whose reviews say "honest" instead of "cheated".

The launch checklist, idea to open shutters

The Bengaluru order of operations, condensed. Run the applications in parallel where you can; the licences usually finish before the interiors do.

1. Choose your entity, get PAN, open a current account. Every registration downstream asks for these three.
2. Finalise the premises and collect the paper. Rent agreement, owner NOC, electricity bill or property tax receipt. These documents feed every application below.
3. Apply for GST on gst.gov.in. No fee, about 7 to 10 working days, and decide your margin-scheme position with a CA while you wait.
4. Register on e-Karmika for the Form C certificate. Within 30 days of starting, then frame it and display it.
5. Apply for the BBMP trade licence 30 days before opening. Confirm the trade category in writing at the zonal office, and order the 60 percent Kannada signboard now.
6. Buy an approved precision balance and get it stamped via e-Mapan before the first purchase. Diarise re-verification. Buy the XRF or karat meter in the same breath.
7. Enrol for professional tax, and take the free Udyam registration. An hour of portals, done.
8. Build the compliance kit before the first seller walks in. KYC forms with ownership declaration, sequential purchase register, itemised receipts, CCTV over the counter, bank-transfer payouts as default, and a written no-melt hold window with a police-notice check.
9. Set the cash policy with your CA. Stay under the PMLA and income tax cash triggers, or register with FIU-IND and build full reporting compliance. Decide on paper, not on vibes.
10. Line up the refinery relationship. Refiner KYC treats old gold from unknown counters as a red flag, so your seller records are literally what make your stock sellable. Agree assay terms and settlement cycles before launch.
11. Only if reselling jewellery to consumers: take the free BIS jeweller registration and budget for HUID re-hallmarking. Skip if you sell only melt to refiners.
12. After stabilising: ISO 9001 from an NABCB-accredited body, the trust badge for the wall and the website.

Do all twelve and you will open with cleaner paperwork than buyers who have run counters for a decade. Then comes the part no registration portal can give you: sellers actually walking in. That problem has a specialist too. Read on.

When you open the shutters: already running a gold buying business?

Everything above gets you to a legal, well-equipped counter. None of it brings a single seller through the door. Footfall is a separate craft, and it is the one we practise daily: Apex Influence is the agency behind marketing for your gold buying business, built specifically for this industry, from one counter in Jayanagar to chains across states. Billing is factual and boring on purpose: one agreed commission rate, transparent reporting, written scope.

The growth engine has four channels, each with its own deep playbook: Google Ads that catch sellers the moment they search "cash for gold", Meta ads that reach households before festival season, search rankings that make your counter the answer in your city, and a lead system that turns enquiries into walk-ins.

The fastest first-month seller source. The Gold Buying Lead Exchange is a live marketplace of verified gold sellers in your area (feature). Instead of waiting months for your own funnel to warm up, you plug into demand that already exists (advantage), which means your float starts rotating and your staff start closing in week one, not quarter two (benefit).

Clean books from day one. The Samaya gold ERP and CRM handles purchase billing with purity and GST built in, KYC capture with photos, live rate lock at the counter and branch-wise dashboards (feature). The paper trail this guide kept insisting on builds itself while the deal happens, no notebook ledgers, no month-end archaeology (advantage). When a notice, an audit or a refiner's KYC questionnaire arrives, you answer in minutes, and your CA starts returning calls with good news (benefit).

And if you want to study the craft before you talk to anyone, start with our guides on digital marketing for gold buyers, how to market a cash for gold business, and generating gold buying leads. They are written for owners, which, if you have read this far, is what you are about to become.

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One agreed commission rate. Transparent reporting. Bengaluru and everywhere sellers search.