The cores of electrical machines are generally punched and laminated to reduce the eddy current losses. These manufacturing processes such as punching and cutting deform the electrical sheets and deteriorate its magnetic properties. Burrs are formed due to plastic deformation of electrical sheets. Burr formed due to punching on the edges of laminated sheets impairs the insulation of adjacent sheet and make random galvanic contacts during the pressing of stacked sheets. The effect of circulating current occurs if the burrs occur on the opposite edges of the stacks of laminated sheets and incase of bolted or wielded sheets, induced current return through it. This induced current causes the additional losses in electrical machine. The existence of surface current on the boundary between two insulated regions causes discontinuity of tangential component of magnetic field. Hence, based on this principle, the boundary layer model was developed to study the additional losses due to galvanic contacts formed by burred edges. The boundary layer model was then coupled with 2-D finite element vector potential formulation and compared with fine mesh layer model. Fine mesh layer model consists of finely space discretized 950028 second order triangular elements. The losses were computed from two models and were obtained similar at 50 Hz. The developed boundary layer model can be further used in electrical machines to study additional losses due to galvanic contacts at the edges of stator cores.