The United States government, its agencies, and instruments are exempt from Indiana sales tax when making purchases of tangible personal property, accommodations, or public services. Sales by these same entities are also exempt from sales tax. Indiana imposes a state sales tax of 7 percent on the sale of most tangible items, but there are exemptions for certain goods and services, as well as for certain organizations and types of sales. Common products that are exempt from sales tax include edible foods and unprepared health care items.
Government agencies and school districts may also benefit from sales tax exemptions when buying or selling certain items. This exemption is derived from the BT-1 sales tax application and the ST-103 sales tax return that must be completed by Indiana businesses and out-of-state companies that do business in the state of Indiana. Indiana manufacturers can take advantage of a statute of limitations that allows them to return and recover sales tax refunds up to three years, or 36 months, from the time the Indiana sales or use tax was paid. Additionally, manufacturers can recover taxes wrongly paid to their suppliers or self-liquidated on their use tax returns as part of Indiana sales tax exemptions for manufacturing.
