Gold purity is not just a quality specification - for a bullion trader, it is the single most important variable in every trade. Two bars can weigh exactly the same but have completely different values because of their purity. Understanding purity, the millesimal fineness system, and how to calculate fine weight from gross weight is fundamental to recording bullion transactions correctly.
This guide covers the purity systems used in Indian bullion trading, how to convert between karat and millesimal fineness, and how fine weight calculation flows through every ledger entry and inventory record.
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The Two Purity Systems in Indian Bullion Trading
Indian bullion markets use two parallel purity systems, and experienced traders switch between them fluently depending on the context:
Karat (K) System
The karat system divides gold into 24 equal parts. Pure gold is 24K (24 parts gold out of 24). 22K gold contains 22 parts gold and 2 parts alloy. The karat system is mainly used in the jewellery trade and in retail consumer contexts.
Millesimal Fineness (Parts Per Thousand)
The millesimal fineness system expresses purity as parts per thousand. Pure gold is 999 (also written 999.9 or 9999 for investment-grade). This system is standard in wholesale bullion trading because it is more precise - the difference between 916 and 920 is meaningful in a large trade.
| Karat | Millesimal Fineness | Gold Content | Common Use in India |
|---|---|---|---|
| 24K | 999 / 999.9 | 99.9% | Gold bars, coins, investment gold, refinery output |
| 23K | 958 | 95.8% | Traditional jewellery in some regions |
| 22K | 916 | 91.6% | Most common for hallmarked jewellery in India |
| 21K | 875 | 87.5% | Traded in some regional sarafa markets |
| 18K | 750 | 75.0% | Designer jewellery, diamond-set pieces |
| 14K | 585 | 58.5% | Export jewellery, less common in Indian retail |
BIS Hallmarking note: Since June 2021, BIS hallmarking is mandatory for gold jewellery sold in India. The hallmark stamp includes the purity in millesimal fineness (999, 916, 750 etc.). This has standardised purity declarations in the trade and made record-keeping more consistent.
What is Fine Weight?
Fine weight (also called fine gold weight or pure gold equivalent) is the weight of pure gold contained in a given piece, calculated from its gross weight and purity.
The formula is simple:
Fine Weight = Gross Weight × (Purity / 1000)
For karat: Fine Weight = Gross Weight × (Karat / 24)
Examples
| Gross Weight | Purity | Fine Weight Calculation | Fine Weight |
|---|---|---|---|
| 100g | 999 (24K) | 100 × (999 / 1000) | 99.9g |
| 100g | 916 (22K) | 100 × (916 / 1000) | 91.6g |
| 100g | 750 (18K) | 100 × (750 / 1000) | 75.0g |
| 50g | 916 (22K) | 50 × (916 / 1000) | 45.8g |
| 200g | 875 (21K) | 200 × (875 / 1000) | 175.0g |
Why Fine Weight Matters for Every Ledger Entry
When you record a bullion trade in your daily ledger, the rate is typically quoted per gram of fine gold (or pure silver), not per gram of the alloy. This is what makes purity so critical to every entry:
If the market rate is ₹7,500 per gram of 999 gold and you are buying 100g of 916 gold, the price is not simply 100 × ₹7,500. The calculation is:
- Fine weight of the 916 gold = 100 × 0.916 = 91.6g
- Value = 91.6g × ₹7,500 = ₹6,87,000
Entering the wrong purity - even a small difference like 916 vs 920 - changes the fine weight and therefore the settlement amount. At ₹7,500/g, a 4-point purity error on 100g is ₹300 per trade. On 500g, it is ₹1,500. Across dozens of trades per day, accumulated purity errors become significant.
Understanding Tola
Tola is a traditional Indian unit of weight equal to 11.6638 grams (the weight of a silver rupee coin under the British Raj). It is still widely used in gold trading, particularly in North India and among older market participants.
| Unit | Equivalent | Common Use |
|---|---|---|
| 1 Tola | 11.6638 grams | Standard for gold bars in India (10 tola bar = 116.638g) |
| 10 Tola | 116.638 grams | The most common gold bar size traded in sarafa bazaar |
| 1 Troy Ounce | 31.1035 grams | International standard; used in MCX pricing |
| 1 Kg | 1000 grams | Large bar, standard for refinery-level transactions |
Record-keeping note: In digital bullion software, always record weight in grams (not tola) to maintain precision and enable automatic fine weight calculation. Converting to tola for display is a convenience function - the underlying record should always be in grams.
How Purity Affects Badla Transactions
Badla - the exchange of gold of one purity for gold of another - is where fine weight calculation becomes especially important. In a badla transaction, no money changes hands for the metal itself. Only the rate difference (the value differential between the two purities) is settled in cash.
For example, if you exchange 100g of 916 (22K) gold for 100g of 999 (24K) gold:
- Fine weight of 916 gold: 100 × 0.916 = 91.6g
- Fine weight of 999 gold: 100 × 0.999 = 99.9g
- Fine weight difference: 99.9 − 91.6 = 8.3g pure gold
- Cash settlement: 8.3g × current rate per gram of 999 gold
This is why badla cannot go into a regular buy/sell ledger - the transaction structure is fundamentally different, and the settlement is based on fine weight difference, not gross weight.
Purity in Your Daily Ledger and Software
Every entry in your daily ledger should capture purity explicitly. Good bullion trading software will:
- Accept purity in millesimal fineness (999, 916, 750) or karat and convert automatically
- Calculate fine weight automatically from gross weight and purity
- Apply the correct rate (per gram of fine gold) to the fine weight to compute trade value
- Track inventory separately by purity - 916 and 999 gold are not interchangeable in your stock
- Handle badla rate difference calculation automatically
If your current system requires you to calculate fine weight manually before entering a transaction, that is a significant source of error risk. Bullion Master handles all of this automatically - purity, fine weight, and value are computed from the inputs you enter, exactly as the calculations above show.Try the 30-day free trial on Android.