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Indiana - Sales and Use Tax Exemptions and Exemption Certificates

Indiana imposes an excise tax known as the state gross retail tax (sales tax) on retail transactions made in Indiana. The person who acquires property in a retail transaction is liable for the tax on the transaction unless the sale qualifies for a statutory exemption. The purchaser shall pay the tax to the retail merchant as a separate added amount to the consideration in the transaction. (IC 6-2.5-2-1)

INDIANA EXEMPTIONS: Some of the exempt transactions of retail merchant are:

Indiana Exempt Uses: Retail transactions involving animals, feed, seed, plants, fertilizer, insecticides, fungicides, and other tangible personal property if the person acquiring the property acquires it for his direct use in the direct production of food for sale or for further use in the production of food (IC 6-2.5-5-1); sale of agricultural machinery, tools, and equipment if the person acquiring that property acquires it for his direct use in the direct production, extraction, harvesting, or processing of agricultural commodities (IC 6-2.5-5-2); sale of manufacturing machinery, tools, and equipment if the person acquiring that property acquires it for direct use in the direct production, manufacture, fabrication, assembly, extraction, mining, processing, refining, or finishing of other tangible personal property (IC 6-2.5-5-3, IC 6-2.5-5-4); sale of property acquired for direct consumption as a material to be consumed or incorporated in the direct production of other tangible personal property in the person's business of manufacturing, processing, refining, repairing, mining, agriculture, horticulture, floriculture, or arboriculture (IC 6-2.5-5-5.1, IC 6-2.5-5-6); sale of materials used in construction business, public street, or utility service (IC 6-2.5-5-7); Motor vehicles or aircrafts property acquired for resale, rental, or leasing in course of business (IC 6-2.5-5-8); sale of returnable containers; nonreturnable packaging (IC 6-2.5-5-9); tangible personal property classified as plants and expenses in gas, electric or stream, water, waste water utilities and other public utilities (IC 6-2.5-5-10 to IC 6-2.5-5-14); equipment used in intrastate telecommunication services; video, Internet access, or VOIP services (IC 6-2.5-5-13).

Indiana Exempt Products:
Intrafamilial title transfers of motor vehicles (IC 6-2.5-5-15.5); newspaper, medical equipment and devices, drugs, insulin, oxygen, blood or blood plasma; drug samples, blood glucose monitoring devices; packaging and literature; food and food ingredients for human consumption; sales of meals to schools, fraternities, sororities and student cooperatives; school building materials; rolling stock; manufactured homes or industrialized residential; lottery ticket; sales of motor vehicles, trailers or aircraft, delivery for use outside of Indiana; vehicle lease transactions; research and development equipment. (IC 6-2.5-5-17 to IC 6-2.5-5-43)

Indiana Exempt Entities: Purchases by the State of Indiana or any Indiana local government are exempt from sales tax. Sales by state and local agencies are also exempt unless the sale involves a "proprietary"; not-for-profit organizations organized and operated exclusively for either religious, charitable, scientific, fraternal, educational, literary or civic purpose; non profit Cemetery Associations, Monasteries, Churches, Parochial Schools, Convents, Pension Trusts, Labor Unions, Business Leagues and licensed Hospitals. (IC 6-2.5-5-12.5; IC 6-2.5-5-16 to ; IC 6-2.5-5-26, IC 6-2.5-5-44)

CAUTION: Sales tax exemptions mentioned above are very briefly described. Please see the exemption statute and the applicable regulations for details. Transactions that do not meet the requirements of the exemption statute and its applicable regulations do not qualify for the sales tax exemptions.

INDIANA EXEMPTION CERTIFICATES: Retail merchants are required to collect the tax on each retail transaction unless the merchant can establish that the purchaser will use the item for an exempt purpose. An exemption certificate is not valid unless executed in the prescribed and approved form and all information requested on such form is completed.

The following persons are authorized to issue exemption certificates:

  • Retail merchants, wholesalers, and manufacturers, who are registered with the Department.
  • Organizations which are exempt from the state gross retail tax under IC 6-2.5-5-21, IC 6-2.5-5-25, or IC 6-2.5-5-26 and which are registered with the Not-For-Profit Section of the Department.
  • Other persons who are exempt from the state gross retail tax with respect to any part of their purchases. (45 IAC 2.2-8-12, 45 IAC 2.2-8-13, 45 IAC 2.2-8-14)
Indiana Application for Exemption:

Indiana Exemption Certificates:

State and Local Government : To qualify for the exemption, the purchase must be invoiced directly to the state or local government making the purchase. A state agency that makes only exempt purchases is not required to register with the Department. All state agencies should use the federal ID number and the state TID number issued to the Auditor of State when making exempt purchases.(Sales tax Information Bulletin #4)

 
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