How to manage import purchase and landed cost in tigg ?

Import purchases involve more than just the supplier invoice amount. The actual cost of imported goods, often referred to as the “landed cost,” includes customs duties, freight, insurance, transportation, clearing charges, and other related expenses. Tigg allows you to record and allocate these costs accurately so that both inventory valuation and tax reporting remain correct.

How Import Purchase Differs from Local Purchase

Recording an import purchase is more complex than recording a local purchase due to the nature of taxation, additional expenses, and the involvement of multiple parties.

Key Differences

• In import transactions, customs duties and taxes are calculated on the customs transaction value, which may differ from the actual price charged by the supplier.
• In local purchases, VAT is directly charged by the supplier on the invoice amount. However, in import purchases, VAT is calculated separately by the customs office after adding customs duties and other assessable values.
• Import-related expenses such as freight, insurance, transportation, clearing charges, and bank charges are usually incurred separately and at different stages of the import process. These costs must be recorded and allocated properly to determine the actual landed cost of goods.
• Import transactions often involve multiple parties including:
• Foreign suppliers/exporters
• Customs clearing agents
• Transporters
• Banks
• Insurance companies
• Customs authorities
• Payments and settlements may therefore happen across multiple transactions and parties.
• Foreign currency transactions add another layer of complexity due to exchange rate conversion and customs valuation requirements.

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1. Required Documents

Before recording an import purchase, ensure you have the following documents available:

• Commercial Invoice from the foreign supplier (usually in foreign currency)
• Pragyapan Patra (Customs Declaration) issued by customs
• Bills for freight, insurance, transportation, clearing charges, or any other related import expenses

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2. Recording an Import Purchase in Tigg

Step 1: Create a Purchase Bill

• Navigate to the Purchase module and open Purchase Bills
• Click on + Add New
• Select the supplier
• Enter the Bill Date and Supplier Invoice Reference Number based on the Commercial Invoice
• If the Foreign Currency feature is enabled in Tigg, you will see options to select the currency and exchange rate while recording the transaction. Select the currency mentioned in the commercial invoice and enter the exchange rate as specified in the Pragyapan Patra.
  
  

Step 2: Enable Import Mode

Enable the “Is Import” option in the purchase bill.
Once enabled, additional import-related fields will appear:

• Country: Select the country of origin of the goods
• Date: Enter the date mentioned in the Pragyapan Patra
• Document No: Enter the Pragyapan Patra / Customs Declaration number

Step 3: Enter Product Details and Tax Base

Add the imported products to the bill. If the Foreign Currency feature is enabled and a foreign currency has been selected at the beginning of the transaction, enter the product rates in the actual foreign currency amount as mentioned in the supplier’s commercial invoice. Otherwise, convert the product rates into NPR using the exchange rate applicable on the customs declaration (Pragyapan Patra) date before recording the transaction.

Tax Base Entry: 

The Tax Base field is important for VAT compliance. For each item, enter the Tax Base amount exactly as mentioned in the Pragyapan Patra, generally from the customs tax calculation section. Tax Base represents the amount before VAT on which customs VAT is calculated. This value should always be recorded in NPR, as customs duties and VAT are calculated by the customs office in NPR at the time of import clearance.

It is important to note that the Tax Base amount is not separately accounted for in the accounting records. It is used only as a valuation amount for customs VAT calculation and compliance purposes. Although recording the Tax Base field is optional, the Purchase Register report uses this value to display taxable purchases related to imports. Therefore, entering the Tax Base amount ensures accurate reporting in the Purchase Register.

Note: The Tax Base may differ from the actual purchase price because customs authorities may apply their own valuation for tax calculation purposes.

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3. Recording Additional (Landed) Costs

Additional costs represent expenses incurred while bringing goods to your warehouse.
Step 4: Add Additional Costs

• Scroll to the Additional Cost section in the purchase bill
• Add cost items such as:
• Import Duty
• Freight Charges
• Insurance
• Transportation
• Clearing Charges

You can also create custom cost terms from:
Configurations → Apps → Cost Terms → Additional Cost Terms
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4. Cost Allocation Methods

Tigg allows multiple allocation methods for distributing landed costs across products:

• By Value
  Distributes cost based on the value of items
• By Quantity
  Distributes cost based on item quantity
• By Tax Base
  Distributes cost based on customs valuation
• Product-Wise
  Allows manual allocation of specific costs to individual products

Excel-Based Allocation

For large consignments, you can:

• Download the allocation template
• Fill in product-wise landed costs
• Re-upload the Excel file for accurate allocation

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5. GL Account Handling for Additional Costs

Each additional cost line includes options for:

• Description
• GL Account Selection

If a GL Account is selected:

• The accounting impact of the additional cost is recorded together with the purchase bill

If left blank:

• The expense can be recorded separately using transactions such as:
• Quick Payment
• Journal Voucher
• Expense Entry

This flexibility allows businesses to either capitalize costs directly during purchase entry or account for them separately.
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6. Save & Approve the Purchase Bill

Once the bill is saved and approved:

• Inventory valuation is automatically updated
• Product unit cost is recalculated by including allocated landed costs
• VAT and import values are reflected correctly in reports

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7. Verification and ReportingPurchase Register

To verify tax reporting:

• Go to Reports → Purchase Register

The transaction will appear under:

• Taxable Import (करयोग्य पैठारी)

VAT amounts will be reflected according to the customs tax base and can be used for VAT credit claims.
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Inventory Valuation / Product Ledger

To verify updated inventory cost:

• Navigate to Inventory → Products
• Open the imported product
• View Product Movement / Ledger

The Unit Cost will now include:

• Purchase Price
• Allocated Import Duties
• Freight
• Insurance
• Other Additional Costs

This ensures accurate inventory valuation and profit margin calculation.
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8. Advanced: LC / Consignment Tracking

For businesses managing imports through LC (Letter of Credit) or consignment-based tracking:

• Create a dedicated Control Account in the Chart of Accounts
  Example: “LC No. 12345 Control Account”
• Record related expenses such as:
• Freight
• Insurance
• Clearing Charges
• Bank Charges

into this control account as they occur.
During the final purchase bill entry:

• Select the Control Account in the Additional Cost section
• Tigg will transfer the accumulated balance into inventory valuation and clear the control account balance

This approach helps maintain proper tracking of import-related expenses until the shipment is finalized.
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9. Additional Cost Summary

Within any approved Purchase Bill:

• Open the Options menu
• Select Additional Cost Summary

You can:

• Review detailed landed cost allocation
• Export the allocation summary to Excel for verification and audit purposes

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For a more detailed guide on entering import purchase transactions, watch our tutorial video specifically dedicated to this topic: