Indiana: Sales Tax Handbook
What purchases are taxable in Indiana?
The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the Indiana sales tax.
Contents1.) Taxability of Goods and Services
- General Indiana taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
Section 1: Taxability of Goods and Services
What transactions are generally subject to sales tax in Indiana?
Items that are taxable in Indiana include all tangible products. While groceries are exempt from sales tax, prepared foods are taxable. In addition, some grocery items are taxable. These items fall into three categories, candy, soft drinks, and dietary supplements.
Are services subject to sales tax in Indiana?
You are not obligated to pay sales tax in Indiana if you offer a service. But the water gets a little murky if your service results in"tangible personal property". The state defines this as the "true object"Ã‚Â of the transaction.
To clarify things, services such as chiropractic adjustments do not result in a tangible product; therefore, they are not taxable. (Note: This does not include rental income; it is taxable unless rent is being paid for facilities that are creating a feature film.)
the contrary, services that offer the creation of goods that result in a product are taxable. The ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œtrue objectÃƒÂ¢Ã¢â€šÂ¬Ã‚Â of the service is actually what is being contrived. Therefore, there is a tax obligation.
Ask yourself if you are selling a good at the end of your service. If you have a product to sell after your service has been rendered, then you have a tax obligation.
You can find a table describing the taxability of common types of services later on this page.Top
Are shipping & handling subject to sales tax in Indiana?
Shipping charges in Indiana are not taxable as of July 1, 2013. The Department of Revenue now declares that there is no tax obligation on shipping charges as long as they are stated separately on the invoice.
If you choose to deliver goods yourself or through a private delivery service, then your shipping is taxable. The exemption only applies to shipping done through the US mail or common carriers like UPS or Fed Ex.
Are drop shipments subject to sales tax in Indiana?
"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In Indiana, drop shipments may or may not be subject to taxation depending on the circumstances.
Section 2: Taxability of Various Items in Indiana
This table shows the taxability of various goods and services in Indiana. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.
|Products on Amazon.com||TAXABLE *|
|Food and Meals|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE|
|Manufacturing and Machinery|
|Utilities & Fuel||EXEMPT|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|Newspapers and Magazines|
|General Occasional Sales||EXEMPT *|
|Motor Vehicles||TAXABLE *|
|Optional Maintenance Contracts|
|General Optional Maintenance Contracts||TAXABLE *|
|Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts||EXEMPT|
|Pollution Control Equipment|
|General Pollution Control Equipment||TAXABLE *|
|Software and Digital Products|
|Canned Software - Delivered on Tangible Media||TAXABLE|
|Canned Software - Downloaded||TAXABLE|
|Custom Software - Delivered on Tangible Media||EXEMPT|
|Custom Software - Downloaded||EXEMPT|
|Customization of Canned Software||TAXABLE *|
|Digital Products||TAXABLE *|
|Vending Machine Sales|
* See notes in category taxability page for details
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