Understanding Landed Costs for India Tax Calculations

Landed costs are additional fees that exceed the purchase price of an item and are typically associated with the expected delivery charges of an order. Landed costs enable you to track the actual cost of purchasing an item. Landed costs are not taxable and cannot be applied to the total cost of a purchase order.

In India localization, landed cost is attached to the purchase order to define the tax applied to the particular transaction.

The system uses the rules associated with landed costs to calculate taxes for purchase orders. The rules also help to ensure that you pay a tax on the base price, if applicable, and not on a previously taxed amount. When you enter a purchase order, the system automatically assigns a landed cost based on the following hierarchy:

1. The item, branch/plant, and supplier

2. The item and branch/plant

3. The landed cost rule

When you enter receipts for purchase orders, the Landed Cost Selection program (P43291) retrieves the landed cost rules and performs the corresponding tax calculations. The tax calculations are based on the specific item purchased or the landed cost rule code.