Karigar Management for Indian Jewellers — Issue, Receive, Pay

If you make jewellery in-house — or even just rework old gold and outsource design pieces — you work with karigars. Some shops have one in-house karigar; some have 20 outwork relationships across a city. Either way, gold weight flows out and (mostly) flows back. The "mostly" is where the money disappears.

This guide is for jewellers managing karigars by paper register, who want to know whether they're losing weight and how to plug it. We've watched dozens of shops go from "we just trust him" to "we run a 0.2% wastage shop with no arguments" — the difference is process, not personality.

What does a karigar actually do?

A karigar is a goldsmith — the craftsperson who turns raw gold (and silver, platinum, stones) into finished jewellery. Two relationship models exist:

• In-house karigar — works on your premises, paid a fixed salary plus per-piece bonuses. You provide tools and bench. Fewer trust issues, higher fixed cost.
• Outwork karigar — works from their own workshop, you issue raw metal, they return finished pieces and scrap, you pay making charges. Variable cost, lower commitment, but every issue is a small trust exercise.

Most retail shops use a mix — one in-house for daily repairs and quick turnarounds, 3–5 outwork karigars for design pieces and bulk orders. This guide covers both, but the operational risks are higher with outwork.

The issue-receive-settle cycle

Every karigar relationship follows the same three-step rhythm. The rigor at each step is what separates well-run shops from leaky ones.

1. Issue (you to karigar)

• Weigh raw metal on a calibrated scale in front of the karigar.
• Record: date, metal, purity (24K, 22K, etc.), fine weight, gross weight if different.
• Describe the expected piece(s) — "1 mangalsutra, 22K, target 18g + 2g earrings".
• Agree on making charge upfront — per gram, percentage, or flat. Write it on the issue document.
• Agree on expected wastage — usually 1–5% depending on the design.
• Karigar signs the issue document. You keep one copy; karigar keeps one.

2. Receive (karigar to you)

• Karigar brings back:
  • One or more finished pieces (weighed).
  • Scrap (powder, shavings, broken bits) — also weighed.
• Fine weight returned = sum of (finished piece weights × purity) + scrap fine weight.
• Compare to fine weight issued. Difference is wastage.
• Check wastage against the agreed range. If above range, discuss before accepting.
• Record HUID for each finished piece (if hallmarked).
• Calculate making charges due. Add or subtract any side-agreement amounts (extra stones, special finishes).
• Karigar signs the receipt. Stock pieces enter your inventory.

3. Settle (pay karigar)

• Making charges owed = (making charge per gram × net weight of finished pieces) or whatever you agreed.
• Pay in cash / UPI / bank transfer. Record the payment.
• The karigar's ledger should now show zero outstanding (no gold issued out, no making charges owed).

If you don't close the loop on every cycle within, say, 30 days of receipt, the books drift and disputes get harder to resolve.

Tracking weight — fine, gross, scrap

The single most common mistake jewellers make with karigars is tracking gross weight instead of fine weight. Gold doesn't stay 22K — alloys vary, scrap purity is rarely identical to issued purity. Always reconcile in fine weight (24K equivalent).

Fine weight conversion

Fine weight = gross weight × (purity / 999). Examples:

• 22K (916) piece weighing 18.000g gross → fine weight = 18.000 × 916/999 = 16.504g of pure gold
• 18K (750) piece weighing 18.000g gross → fine weight = 18.000 × 750/999 = 13.514g of pure gold

If you issued 20.000g of fine gold to a karigar and they return 19.500g of fine equivalent (across finished pieces + scrap), wastage is 0.500g = 2.5%.

Making charge models

Three common ways to calculate what you owe the karigar:

The per-gram model is the easiest to scale and the hardest to dispute. Settle on one default per karigar (₹350/g for chains, ₹500/g for design pieces) and use flat-rate only for outliers.

The wastage problem

Wastage is the gap between fine weight issued and fine weight returned. Some is inevitable — polishing, soldering, dust. Some is preventable — careless handling, theft, undeclared scrap.

What's normal

If a karigar consistently runs wastage above the band, you have one of three problems:

1. They're new or under-skilled — fix with training or move them to simpler pieces.
2. They're being honest but the design is genuinely wasteful — adjust the band upward for that piece type.
3. They're skimming. This is rare with established relationships but does happen with new ones.

The transparency move

Every karigar should know exactly what wastage rate you expect on every piece type. Put it in writing at the start of the relationship. Then enforce — politely but firmly — at every receipt. The conversation gets easier when the number is on paper rather than a feeling.

Common disputes and how to avoid them

"I returned more scrap than what you've written"

Fix: Always weigh scrap in the karigar's presence, on a scale they trust. Sign the receipt before either party leaves the room. Photograph the scrap if it's contentious.

"You owe me ₹15,000 more in making charges"

Fix: Calculate making charges at receipt time, on the receipt document, with the karigar present. They sign the receipt with the number agreed. No back-calculation arguments later.

"The gold you issued was lower purity than 22K"

Fix: Acid-test or XRF-test the metal at issue time, especially for new karigar relationships. Record the test result on the issue document. After 2–3 cycles with a karigar, trust takes over.

"This piece is too dark / not finished properly"

Fix: Define quality criteria upfront — polish standard, finish level, time-to-deliver. If a piece is rejected, send it back with a written note; don't deduct making charges silently.

"You haven't paid me for last month's work"

Fix: Settle making charges within 7 days of receipt, ideally same-day. Cash-flow strain is the most common cause of karigar relationships souring.

The karigar ledger

For every karigar, you should be able to answer at any moment:

• How much fine gold is "out on issue" with them right now? (Issued − returned)
• How much making charge do I owe them? (Earned − paid)
• What's the history of our wastage rates together?

On paper, this means a running ledger per karigar with columns: date, document, fine in, fine out, making charge added, payment made, balance. Each line balances the karigar's "gold owed to me" and "money I owe them" simultaneously.

In Aurex ERP, this is exactly what the Karigar module does. The karigar's detail page shows fine-weight-out balance + making-charge-payable balance + a chronological list of every issue, receipt, and payment. Print as a statement, share via WhatsApp — the same audit trail customers get for their own ledgers.

Why paper breaks at 5+ karigars

Running one karigar on paper works fine. Running five — each with their own issue cycles, their own making charge rates, their own pending payments — is where most shops start losing money quietly.

The breakdowns we see:

• Lost issue documents. A karigar disputes a 5g piece. You can't find the issue receipt from 3 months ago. You eat the loss.
• Forgotten payments. Making charges accrued but never paid out, then disputed during a busy festival week.
• Wastage drift. You don't notice that Karigar B's wastage has crept from 2% to 4% over six months because you're not reviewing it.
• Mixed metal pots. 22K and 18K scrap from different karigars piling up in the same container, becoming impossible to attribute.

The Karigar module in Aurex ERP is included free on Growth and Enterprise plans. Every issue / receipt / payment is timestamped, the ledger balances in real time, wastage trends are visible per karigar, and you can print a clean monthly statement for each. Not glamorous, but it stops the bleeding.

FAQs

Should I have a written contract with every karigar?

For outwork relationships, yes — even a one-page document covering making charges, wastage bands, delivery expectations, and dispute resolution. For in-house karigars, an employment letter is enough.

Can I claim ITC on making charges paid?

Job work falls under SAC 9988 — 5% GST. If the karigar is GST-registered, they'll invoice you with GST and you can claim input tax credit. Most small karigars aren't registered (turnover < ₹20L threshold), in which case it's a reverse-charge mechanism above ₹5,000/day cumulative. Check with your CA.

What about TDS on karigar payments?

TDS under section 194C (job work) is 1% for individuals, 2% for others, if aggregate payment in a year exceeds ₹1 lakh (per single payment ₹30,000). Deduct and deposit monthly.

How do I handle karigar who skips with my gold?

Rare but happens. Police FIR for criminal breach of trust under IPC 406. Recovery is hard. Mitigation: keep issue balances small (don't let one karigar hold >₹2-3 lakh of metal at any time, especially with new relationships).

Is it OK to give karigars an advance?

Cash advances against future work are common and accepted. Track the advance in the karigar's ledger; it offsets making charges as they accrue. Don't let the advance balance exceed the typical monthly making-charge throughput with that karigar.

Practices vary by region — a karigar in Surat operates differently from one in Coimbatore. Adapt to your local norms but keep the discipline of issue-receive-settle with fine-weight reconciliation. That part is universal.