Indiana charges a flat 7% state sales tax on retail transactions, with no city or county add-ons anywhere in the state, under Indiana Code (IC) 6-2.5-2-2. The seller, not the buyer, carries audit liability for every exempt sale. An exempt sale is only as strong as the certificate behind it. If the Indiana Department of Revenue (DOR) audits a transaction and the seller cannot produce a complete, valid certificate, the DOR assesses the uncollected tax plus penalty and interest against the seller.
That single rate raised $10,959.4 million in FY2024, 47.2% of Indiana’s tax mix, per the state’s official fiscal handbook. Most exemptions run through one form, and getting that form right is the whole game.
What Is an Indiana Sales Tax Exemption Certificate?
An Indiana sales and use tax exemption certificate is a DOR-recognized document, usually Form ST-105, that lets a qualified buyer purchase without paying the 7% tax. The seller must collect and retain it to survive an audit. Different exemptions use different forms, so match the form to the buyer’s situation.
| Form | What it documents | Issuer / flow | Source |
|---|---|---|---|
| ST-105 (State Form 49065) | General exemptions: resale, manufacturing, agriculture | Buyer completes and gives to seller; self-executing | forms.in.gov, rev. R7 (6-23) |
| ST-105G | Government-unit purchases | Government buyer completes for the seller | Indiana DOR |
| ST-105D | Direct pay permit purchases | Permit holder presents to seller | Indiana DOR |
| ST-200 → ST-109 | Utility/production exemption | Buyer applies on ST-200; DOR issues ST-109 to the utility | Indiana DOR (45 IAC 2.2) |
| NP-1 | Nonprofit exempt purchases (since Jan 1, 2023) | Nonprofit obtains it through INTIME | Indiana DOR SIB #10 |
| SST Certificate of Exemption | Multistate / out-of-state exemption | Buyer completes the uniform form | Streamlined Sales Tax |
| NP-20R | Nonprofit registration report (not a purchase certificate) | Filed through INTIME every 5 years | Indiana DOR |
Who Is Exempt From Sales Tax in Indiana?
Indiana exempts buyers by who they are or how they use the goods: resellers, manufacturers, farmers, nonprofits, government units, and businesses consuming utilities in production. Product-based exemptions (prescription drugs, most groceries) apply regardless of a certificate. The table below maps each category to its statute, form, and core test.
| Category | Statute | Form | Key test | Source |
|---|---|---|---|---|
| Resale | IC 6-2.5-5-8 | ST-105 | Bought for resale/rental unchanged; buyer holds an RRMC | IC 6-2.5-5-8 |
| Manufacturing | IC 6-2.5-5-3 | ST-105 | Directly used in direct production (double-direct) | IC 6-2.5-5-3 |
| Agriculture | IC 6-2.5-5 | ST-105 | Direct use in agricultural production for sale | Indiana DOR |
| Nonprofit 501(c)(3) | IC 6-2.5-5-21/25/26 | NP-1 | Furthers exempt purpose; sales over $100k taxable | Indiana DOR SIB #10 |
| Government units | IC 6-2.5-5 | ST-105G / PO | Invoiced to and paid by the government unit | Indiana DOR |
| Production utilities | IC 6-2.5-5 | ST-200 → ST-109 | Over 50% of metered use in exempt activity | Indiana DOR (45 IAC 2.2) |
| Direct pay | IC 6-2.5 | ST-105D | Self-assess use tax on returns | Indiana DOR |
Tangible personal property (TPP) means physical goods; most exemptions attach to TPP, not services.
What Is the Difference Between a Resale Certificate and an Exemption Certificate in Indiana?
A resale certificate defers tax to the end sale; an exemption certificate removes tax because of who the buyer is or how the goods are used. In Indiana both live on Form ST-105, distinguished by which box the buyer checks. The seller retains either one to justify not collecting tax at audit.
| Aspect | Resale certificate | Exemption certificate |
|---|---|---|
| Purpose | Buy goods to resell | Buy tax-free by statute |
| Tax treatment | Tax charged at the end sale | No tax charged at all |
| Typical users | Wholesalers, retailers | Nonprofits, manufacturers, government |
| Audit risk | Seller liable if goods are used, not resold | Seller liable if exemption is undocumented |
How Do You Get an Indiana Sales Tax Exemption Certificate?
Register with the DOR, then complete the right form yourself. Retail merchants get a Registered Retail Merchant Certificate (RRMC) and a Taxpayer Identification Number (TID) through the INTIME portal. Download ST-105 from forms.in.gov, complete it, and give it to the seller. Self-executing exemptions need no state approval; utilities (ST-200) and direct pay permits do.
The RRMC costs $25 per location and is valid for two years per IC 6-2.5-8-1. The TID is a 10-digit number plus a 3-digit location code, visible in your INTIME account.
How Do You Fill Out Indiana Form ST-105?
Complete every field in every section, then sign it. ST-105 requires purchaser identification, the Indiana TID (or an out-of-state registration number), business type, the exemption-reason box with a description of the items, and an authorized signature and date. An unsigned or incomplete certificate is invalid, and the seller must charge tax, per the form’s own instructions.
A buyer who paid tax on a wrongly rejected purchase files for a refund on Form GA-110L directly with the DOR. Note that ST-105 cannot exempt purchases of utilities, vehicles, watercraft, or aircraft. A valid ST-105 also serves as the exemption certificate for county innkeeper’s tax and local food and beverage tax.
How Do You Set Up ST-105 as a Blanket Certificate?
Mark ST-105 as covering recurring purchases so one certificate serves every future order from that seller under the same exemption reason. The blanket designation is scope-limited: it only covers items consistent with the stated exemption reason and described use. The buyer must notify the seller if their status changes, and auditors test blanket certificates against actual purchase patterns.
How Does the Indiana Resale Exemption Work?
Buyers purchasing TPP for resale in the ordinary course of business present ST-105 with the resale box checked and must hold an RRMC. IC 6-2.5-5-8 exempts property acquired for resale, rental, or leasing without changing its form. The seller must confirm the goods fit the buyer’s line of business. Drop-shipment cases are covered in the out-of-state section below.
How Does the Indiana Manufacturing Exemption Work?
Equipment and materials directly used in the direct production of TPP for sale are exempt under IC 6-2.5-5-3, Indiana’s double-direct test. The property must be both directly used and used in direct production. Office supplies, general maintenance items, and shipping materials typically fail the test. Manufacturers document the claim on ST-105 with the manufacturing box checked.
What Qualifies Under the R&D Equipment Exemption?
Research and development equipment used in qualifying R&D activity is exempt and claimed on ST-105 with the appropriate exemption reason, per Indiana DOR guidance. The carve-out covers property used to conduct experimental or laboratory R&D, not routine testing or administrative equipment. At audit, keep use records and project descriptions that tie the equipment to qualifying R&D work.
How Does the Indiana Agricultural Exemption Work?
Purchases used directly in agricultural production for sale qualify on ST-105 with the agriculture box: feed, seed, fertilizer, chemicals, and farm machinery. The goods must support production of commodities for sale, so hobby farming does not qualify. The tax authority here is the Indiana DOR, not the Indiana State Department of Agriculture, so cite DOR guidance when substantiating a claim.
How Do Nonprofits Get Sales Tax Exemption in Indiana?
A federally recognized 501(c)(3) registers with the DOR through INTIME, then makes exempt purchases using Form NP-1, not ST-105. Since January 1, 2023, nonprofits can no longer use ST-105 for exempt purchases, per DOR Sales Tax Information Bulletin #10; grandfathered ST-105s expired December 31, 2023. Purchases must further the exempt purpose.
Nonprofit sales become taxable once the organization’s sales exceed $100,000 in the current or prior calendar year, raised from $20,000 effective May 4, 2023 under Senate Enrolled Act 417. Churches, monasteries, Indiana public and parochial schools, and agricultural youth organizations are exempt from that threshold entirely, per SIB #10.
What Replaced Form NP-20, and Do Nonprofits Still File It?
Form NP-20R replaced the annual NP-20 report and is filed once every five years through INTIME, per the DOR. Initial due dates are staggered by the last two digits of the organization’s Federal Employer Identification Number (FEIN): 00–24 by May 15, 2024; 25–49 by 2025; 50–74 by 2026; 75–99 by 2027. NP-20R keeps exempt status active; it is separate from the NP-1 used at purchase.
How Do Government Entities Claim Sales Tax Exemption in Indiana?
Federal, Indiana state, and local government units are exempt when the purchase is invoiced to and paid directly by the entity. Personal payment with later reimbursement kills the exemption. Government buyers document the claim with a purchase order or Form ST-105G, and the seller retains it like any other exemption certificate.
When Is Form ST-105G Required Instead of ST-105?
ST-105G is the government-specific exemption certificate for direct government purchases. Sellers use it, or an official purchase order, when a government unit buys directly rather than a standard ST-105. Check the entity name, direct-payment confirmation, and the signature of an authorized official. At audit, validate that the government unit, not an individual, was billed and paid.
How Does the Indiana Utilities Sales Tax Exemption Work?
Electricity, gas, and water consumed in exempt production can be bought tax-free, but this needs DOR pre-approval. The buyer applies on Form ST-200; the DOR then issues Form ST-109, which the utility provider keeps on file. Unlike ST-105 exemptions, the buyer never hands a self-made certificate to the utility.
How Does the Predominant Use Test and Utility Study Work?
The predominant-use test applies per meter: if more than 50% of consumption through one meter is used in exempt activity, the full meter qualifies, under 45 IAC 2.2. A utility study substantiates the percentage by inventorying connected equipment, calculating load and hours per device, and allocating exempt versus non-exempt consumption. The DOR expects that study with the ST-200. Multi-meter operations must apply per meter.
What Is an Indiana Direct Pay Permit?
A direct pay permit lets a qualifying business buy everything tax-free and self-assess use tax directly to the DOR on its returns. It replaces per-transaction certificate management, so it suits large purchasers with mixed taxable and exempt use, such as manufacturers. The holder presents Form ST-105D to sellers instead of an exemption reason, per the Indiana DOR. Apply to the DOR for direct pay authority before using it.
It differs from ST-105, a self-executing certificate the buyer completes, and from ST-200, a pre-approved utility exemption tied to specific meters.
Can Indiana Sellers Accept Out-of-State and SST Exemption Certificates?
Yes, with conditions. Indiana is a full member of the Streamlined Sales and Use Tax Agreement (SSUTA) since October 1, 2005, so it accepts the SST Certificate of Exemption. Any claim that Indiana rejects SST certificates is wrong. Out-of-state buyers can also use ST-105 itself.
On ST-105, an out-of-state purchaser without an Indiana TID supplies their resident state’s business license number or state-issued ID number, per the DOR’s form. For a buyer from a non-SSUTA state, accept a completed ST-105 or SST form carrying the buyer’s home-state number rather than that state’s own form. In drop-shipment deals, the shipper collects tax unless the buyer provides valid resale documentation.
Do Indiana Exemption Certificates Expire?
ST-105 certificates do not expire by statute; they stay valid until the buyer’s information or status changes. A 1–3 year refresh is a risk-management practice, not a DOR mandate. Exceptions apply: ST-109 utility exemptions depend on continued qualifying use, and nonprofit status depends on filing NP-20R.
| Item | Rule | Source |
|---|---|---|
| ST-105 expiration | No statutory expiry; valid until buyer info or status changes | Indiana DOR / forms.in.gov |
| Review cadence | 1–3 year refresh is risk-management practice, not a mandate | Industry practice |
| Cure window (defective certificate) | 90 days after sale; 120 days after a DOR request | IC 6-2.5-8-8 |
| Record retention | At least 3 years after final tax due; indefinite if no return or fraud | IC 6-8.1-5-4 |
| Assessment lookback | 3 years; 6 if liability understated 25%+; unlimited if fraudulent or unfiled | IC 6-8.1-5-2 |
| RRMC validity | 2 years; $25 per location | IC 6-2.5-8-1 |
How Do You Validate Indiana Exemption Certificates and Stay Audit-Ready?
Validate at the time of sale, store certificates retrievably, and review them on a fixed cadence. Check that all fields are complete, the TID is valid, and the exemption reason matches the buyer’s business. A missing or defective certificate makes the seller liable for the tax plus penalty and interest at audit, though IC 6-2.5-8-8 allows a cure.
Indiana gives sellers 90 days after the sale to obtain a fully completed certificate in good faith, or 120 days after a DOR substantiation request. Keep records at least three years after the tax was due under IC 6-8.1-5-2, longer where no return was filed. Example: a supplier that accepts a resale certificate from a contractor who then uses the goods on a building project can be held liable when the DOR reclasses the sale as taxable.
How Commenda Automates Indiana Exemption Certificate Management
Commenda’s indirect tax platform automates exemption certificate collection at onboarding or checkout, validates each certificate against Indiana DOR requirements, flags incomplete or expiring documents, and stores everything audit-ready. A buyer self-service portal, bulk certificate requests, and review workflows close the gap that leaves sellers exposed when the DOR samples exempt sales.
The platform supports 100+ ERPs, APIs, and custom integrations, syncing transactions and product catalogs so certificates match real purchase patterns. For sellers unsure where they owe, pair it with the Indiana sales tax guide and the US nexus exposure guide.
Book a demo to get a free review of your Indiana exemption certificate exposure before your next DOR audit.
