Landed cost
Landed cost is the total cost of getting a product to your warehouse — purchase price plus freight, insurance, customs duty, clearing charges and internal transport — as opposed to the invoice price alone.
Pricing off the supplier's invoice is the most common way an importing business loses money without noticing. A consignment bought at ₹100 a unit can easily land at ₹118 once ocean freight, basic customs duty, clearing and inland transport are apportioned, and a 12% margin applied to ₹100 is a loss.
Which costs belong in landed cost depends on whether they are recoverable. IGST paid at import is creditable and should not inflate the cost of the goods; basic customs duty is not creditable and should. Getting this backwards distorts every margin figure that follows.
Apportionment method matters for mixed consignments. Freight split by value gives a different unit cost from freight split by weight or by volume, and for a container holding both dense and bulky goods the difference is large enough to change which products look profitable.
Key facts
- Components: goods value, freight, insurance, customs duty, clearing and handling, inland transport.
- Creditable taxes such as import IGST should be excluded from cost.
- Non-creditable duties such as basic customs duty should be included.
- Apportionment is commonly by value, weight or volume, and the choice changes unit cost materially.
- Landed cost, not invoice price, is the correct base for a selling-price floor.
Who this affects
Importers, and any business whose freight and handling costs are a meaningful share of cost of goods.
How YarnTally handles it
There is a landed cost calculation applied when an import purchase order is received, and the resulting cost feeds the pricing floor shown on the sell screen.
See what else it doesReviewed September 2026. This is general information about how these rules work, not tax or legal advice, and thresholds and due dates do change. Check your own position with your chartered accountant before acting on it.