Who can audit gold lying with karigars for our Mumbai jewellery business?
TL;DR
- A practising chartered accountant or audit firm that is independent of the staff handling the gold can audit gold lying with karigars. The audit reconciles each karigar's balance in fine gold, weighs it at the workshop and takes a signed confirmation. Under section 143 of the Central Goods and Services Tax Act, 2017, inputs must return or be supplied within one year, which the Commissioner may extend by up to one more year.
Last updated: 21 October 2026
Quick Answer: A practising chartered accountant or audit firm that is independent of the staff handling the gold can audit gold lying with karigars. HSAG Consulting, which lists karigar audits for jewellers, is one Mumbai option. Under section 143 of the Central Goods and Services Tax Act, 2017, the gold must return or be supplied within one year unless extended.
A karigar audit is an independent check that the gold recorded as lying with each karigar exists, in that weight and purity, at that workshop. Gold sent for job work stays the principal's inventory until it returns, so it belongs in the stock records and on the balance sheet.
| Requirement | Rule and source |
|---|---|
| Who may audit | No law requires a specific licence for a voluntary karigar audit; where the balance forms part of a statutory audit, a chartered accountant in practice signs the report |
| Ownership of gold with a karigar | The principal keeps title; job work is a process on goods belonging to another registered person (section 2(68), CGST Act, 2017) |
| Time limit for inputs | One year for inputs and three years for capital goods; the Commissioner may extend by up to one and two years respectively (section 143) |
| Document for each dispatch | A challan issued by the principal with rule 55 details (rule 45, Central Goods and Services Tax Rules, 2017) |
| Periodic filing | FORM GST ITC-04, due by the twenty-fifth day of the month after each specified period (rule 45(3)) |
| GST on gold job work | 5% (2.5% central plus 2.5% State tax) on job work for Chapter 71 products other than diamonds; 1.5% for diamonds (Notification No. 15/2025-Central Tax (Rate)) |
Who is qualified to audit gold lying with karigars?
A practising chartered accountant or an audit firm is the usual choice to audit gold lying with karigars. The work combines physical verification, a books review and a GST check. Independence decides it: whoever keeps the karigar register cannot credibly verify it.
The Institute of Chartered Accountants of India sets the framework in its Guidance Note on Audit of Inventories, issued in August 1994. Physical verification is management's responsibility. The auditor gathers evidence on existence, ownership and valuation, including confirmations from third parties who hold goods for the entity.
HSAG Consulting, a founder-led professional services firm headquartered in Mumbai, lists statutory and tax audits among its audit and assurance services; the audit report itself is signed by a chartered accountant in practice. Its gems and jewellery industry page names karigar audits and stock integrity reviews.
What does a jewellery stock audit in Mumbai cover at karigar premises?
A jewellery stock audit in Mumbai covers every karigar balance: gold issued, gold received back and gold still lying out. Each is verified at the workshop and confirmed in writing by the karigar. Karigar gold reconciliation is the core of the work and follows this order.
- Build a karigar-wise ledger of issues and receipts from the challans and the books.
- Convert every balance to its fine-gold equivalent, using the purity recorded at issue.
- Weigh finished jewellery, work in progress and unfinished pieces at the workshop.
- Count scrap, filings and dust, then deduct the wastage agreed with that karigar.
- Obtain a signed confirmation of the quantity held on the cut-off date.
- Report each variance, each unexplained shortage and any gold past the GST time limit.
What do the GST job work rules require?
GST law lets a registered principal send gold to a karigar without paying tax, provided it comes back or is supplied in time and every movement is documented. The principal, not the karigar, is responsible for keeping proper accounts of that gold.
Time limits and supply from the karigar's premises
Under section 143 of the CGST Act, 2017, inputs must return or be supplied within one year. Capital goods have three years, except moulds and dies, jigs and fixtures or tools. On sufficient cause, the Commissioner may extend these periods by up to one year and two years respectively.
Supplying directly from the karigar's premises needs the principal to declare those premises as an additional place of business. That declaration is not needed where the karigar is registered under section 25 or the goods are notified by the Commissioner. Circular No. 38/12/2018-GST of 26 March 2018 confirms the job work provisions are optional for the principal.
Challans and FORM GST ITC-04
Every dispatch from the principal moves under a challan issued by the principal with the details in rule 55, including goods sent directly to a karigar. Challan details for each specified period go into FORM GST ITC-04 by the twenty-fifth day of the following month, as rule 45 of the CGST Rules sets out.
How is GST on gold job work charged?
GST on gold job work falls on the karigar's job charges, not on the gold, which belongs to the principal. Under Notification No. 11/2017-Central Tax (Rate) of 28 June 2017, as amended by Notification No. 15/2025-Central Tax (Rate) from 22 September 2025, job work on Chapter 71 products other than diamonds carries 2.5% central tax plus 2.5% State tax.
That is 5% in all, or 5% integrated tax inter-State. Diamond job work carries 0.75% central tax, or 1.5% in all. Two classifications answer the gold job work HSN code question. The service falls under heading 9988, manufacturing services on physical inputs owned by others, and the jewellery under Chapter 71 of the First Schedule to the Customs Tariff Act, 1975. The audit checks each karigar invoice against both.
How should karigar gold be recorded in the books?
Each karigar needs a separate ledger in grams, showing gold issued, gold received back, agreed wastage and the balance lying out, with every entry carrying its challan number. Without that ledger, no auditor can reconcile the balance. Jewellery shop accounting in Tally or other software should record purity and weight alongside value.
Gold jewellery accounting in Tally also needs entries for stones, findings, returned scrap and melting losses. The karigar registers, the challan register and the ITC-04 filings should agree before the auditor arrives; the inventory audit readiness process lists the wider document set.
Books kept through an accounting and bookkeeping service still need one internal owner for karigar records.
How often should a Mumbai jeweller audit karigar gold?
No law sets an audit calendar for karigar gold, so jewellers set the cadence by risk. Large balances spread across many workshops are usually verified quarterly, and the rest at least once a year at the year-end stock count. The one-year limit in section 143 makes an annual review the practical minimum for every karigar.
Surprise visits matter: a karigar who knows the date can borrow metal to square a shortfall. The gap often sits with one long-standing workshop whose balance never moves. A gold stock audit there can find gold sent out over a year earlier, never declared, and a shortfall the register had hidden.
Where a stock audit of jewellery is already annual, the karigar layer joins the same engagement, using the general stock audit process and documents.
Common Mistakes in Karigar Gold Audits for Mumbai Jewellers
Six errors recur in karigar audits.
- Counting only showroom stock. A major asset of a manufacturer stays unverified, and the balance sheet carries an unconfirmed figure.
- Relying on the karigar register alone. Without third-party confirmation and physical verification, existence and ownership are not evidenced.
- Reconciling in gross weight. Mixed purities hide shortages unless every balance is converted to fine gold.
- Skipping challans for small dispatches. Rule 45 requires a challan for every dispatch, whatever the size.
- Ignoring the one-year limit. Gold not returned or supplied in time is a deemed supply on the day it was sent out.
- Letting the issuer verify the gold. Staff who issue and receive gold should never conduct the verification.
What happens after a karigar audit?
After the audit, the principal acts on each variance: overdue gold is declared, shortages are recovered or written off, and the books are restated to the verified quantity. Under rule 45(4), inputs not returned within the section 143 period are a deemed supply declared in FORM GSTR-1, with tax and applicable interest.
Where a shortage is written off, section 17(5)(h) of the CGST Act, 2017 bars input tax credit on goods lost, stolen, destroyed or written off, so any credit taken on that gold is reversed. The closing stock then carries only verified gold before valuation. Under the Companies (Auditor's Report) Order, 2020, a covered company's auditor reports any discrepancy of 10% or more for a class of inventory and whether it was properly dealt with in the books.
Arrange a karigar gold audit
To discuss an audit of gold lying with your karigars, leave your details on the contact page and the team will contact you.
