In-Transit Inventory

It is also called goods in transit, stock in transit, transit stock or pipeline inventory. It covers supplier purchases, imports and transfers between your own warehouses or branches. Stock you have ordered but the supplier has not dispatched is inventory on order, not in transit.

The contract decides, not the label on the invoice. When the terms pass title on dispatch, the buyer records the goods on the dispatch date even though they have not arrived. When the supplier stays responsible for transport and insurance until delivery, the buyer records nothing until the goods reach its premises (Taxmann).

The last two rows of the table follow Schedule I of the CGST Act and Rule 55 (ClearTax).

Check the trade term against the transport mode. FOB (Free On Board) is an Incoterms rule, from the International Chamber of Commerce, that applies to sea and inland waterway transport only. For road, rail or air, FCA (Free Carrier) is the usual rule (ICC Academy).

Goods in transit appear within inventories, under the relevant sub-head. Schedule III states: "Goods-in-transit shall be disclosed under the relevant sub-head of inventories" (Schedule III, ICAI copy). In practice, raw materials in transit sit with raw materials and finished goods in transit with finished goods.

Documents prove movement, not receipt. An e-way bill (the electronic document for goods movement) is useful but not conclusive evidence that control passed; check input tax credit against the eligibility rules and your GST portal data (taxguru). Keep the lorry receipt, the goods receipt note and the gate record beside it.

Units in transit = average daily demand × transit days. Value = units × unit cost. At 100 units a day, 6 transit days and ₹250 a unit: 100 × 6 = 600 units, and 600 × ₹250 = ₹1,50,000. It assumes steady demand and replenishment. For inbound supply, use daily consumption or sales. Transit time feeds the reorder point formula as part of lead time.

Transit days can be cross-checked against the e-way bill rule. Under Rule 138(10), ordinary cargo gets one day per 200 km or part of it, so validity days = distance ÷ 200, rounded up (GSTExtract; Taxmann). A lane that regularly takes far longer than that has a hold-up worth investigating.

Stock vanishes when sending and receiving are not tied to one document. A transfer that leaves site A's count but waits for a receiving entry at site B sits in neither count and has no owner.

A holding location or an in-transit status in the system keeps a dispatched transfer in one count until it is received. One transfer document carrying quantity sent and quantity received, plus an exception list for anything unreceived after validity plus one day (or after the transporter's committed delivery date plus one day where there is no e-way bill), closes the gap. See also why system stock differs from the shelf.

A shipment close schedule is one row per open shipment at the reporting date, with these tests. The evidence list follows taxguru. Tests 2 to 5 depend on the answer to test 1.

How do you test the transfer clause of an in-transit shipment?

Pass: you can quote the contract line that says when title passes. Fail: only an "FOB" or "CIF" (Cost, Insurance and Freight) label, or FOB used for a lorry load.

How do you test the handover proof?

For shipments where title passes on dispatch. Pass: a lorry receipt or bill of lading dated on or before the reporting date. Fail: invoice date only.

How do you test the receipt date?

Pass: the GRN date is recorded. Fail: a shipment included at year-end with no later receipt.

How do you test the document trail?

Pass: the invoice number sits beside the shipment, and an e-way bill number too where one was required. Fail: either is missing.

How do you test the entry date?

Pass: inventory is booked on the date the contract passes title (dispatch date if title passes on dispatch, receipt date if on delivery). Fail: the booking date differs from the title date.

How do you test the after-date review?

Pass: each open shipment has a later receipt, return, credit note or claim on file by the date the accounts are signed. Fail: none of these.

We record purchase orders with expected arrival dates and lead times, so inventory on order is visible. Transfers, receiving and putaway, and inventory movement alerts about transfers cover the warehouse side of the journey. Purchase orders, transfers and inventory alerts are on every plan; putaway into bins sits with bin tracking on the Enterprise plan. Our landed cost feature adds freight, import duties and customs fees to each unit's cost and is on the Enterprise plan; the method is in landed cost calculation.

As of October 2026, Basic costs $199 a month billed yearly in US dollars and includes one user licence; extra users are $42 a month each. Basic covers purchase orders, transfers, multiple warehouses, barcoding and inventory alerts. A 15-day free trial gives full access with no credit card. In a demo we walk through your own transfer and receipt flow. Book a demo.