Indiana Sales Tax: Registration, Filing, and Exemptions

Indiana sales tax is a flat 7% on retail sales of tangible goods and certain digital products, collected by the seller and remitted to the Indiana Department of Revenue. If your business has a physical presence in the state or brings in more than $100,000 in Indiana sales as a remote seller, you must register, collect the tax on every taxable transaction, and file returns on the schedule the department assigns you. Miss any part of that cycle and the consequences reach past the business into personal assets.

Who Has to Collect Indiana Sales Tax

Two kinds of connection to the state trigger the collection obligation. Physical nexus exists when your business maintains a location, warehouse, distribution center, or employees in Indiana. Even a single salesperson soliciting orders inside the state is enough.¹

Economic nexus applies to remote sellers. If your gross revenue from sales delivered into Indiana exceeds $100,000 in either the current or previous calendar year, you must register before your next taxable sale. Those sales include tangible goods, digital products, and services delivered into the state.²

Operating past either threshold without registering exposes you to back taxes on every uncollected sale, a 10% penalty, and accruing interest.

Selling Through Amazon, Etsy, or Walmart Marketplace

If your Indiana sales flow through a marketplace platform, the platform is the retail merchant for those transactions. Indiana law makes qualifying marketplace facilitators responsible for collecting and remitting the tax when their own Indiana sales exceed $100,000.³

That matters for small sellers who wouldn’t independently meet the threshold. If all your Indiana sales run through a qualifying marketplace, the platform handles the tax. But direct sales through your own website, craft fair booth, or storefront count toward your own nexus calculation and can require a separate registration. A marketplace facilitator that collects the wrong amount because a seller supplied inaccurate product or sourcing information is relieved of liability, so keeping your product data current on the platform matters for both sides.³

How to Register for a Retail Merchant Certificate

Registration runs through INBiz, Indiana’s centralized business filing portal.⁴ The core document is the BT-1 Business Tax Application, which covers sales tax along with related tax types like withholding, food and beverage tax, and county innkeeper’s tax when they apply.¹

Before you start, gather:

Your Federal Employer Identification Number, or Social Security Number if you’re a sole proprietor
Your legal entity name and any DBA names you use publicly
Your North American Industry Classification System (NAICS) code
Names, contact details, and home addresses for all owners, partners, or corporate officers

You’ll sign electronically and pay a non-refundable $25 registration fee per location.⁵ Three storefronts means $75 total. Once processed, you receive a Registered Retail Merchant Certificate, which must be displayed at each business location where retail sales occur.

The certificate is valid for two years. If your filings and payments are current at renewal time, the Department of Revenue sends a renewed certificate automatically at no charge.⁵ Falling behind on either puts automatic renewal at risk and can force you to halt taxable sales until you clear the balance and reapply. Adding a location or changing your business structure, such as converting a sole proprietorship into an LLC, requires an update through INBiz.

Filing Returns and Deadlines

Registration is the starting line. After that, you file periodic returns and remit the tax you’ve collected. Indiana assigns your filing schedule based on your average monthly liability during the state’s prior fiscal year, which ends June 30:

If your average monthly liability is $1,000 or more, returns are due by the 20th of the following month.
If your average monthly liability is under $1,000, returns are due by the 30th of the following month.⁶

When a due date falls on a weekend or holiday, payment is due the next business day. Returns are filed electronically through INTIME on Form ST-103.⁷ The department can reassign your filing frequency mid-year if your liability shifts significantly, and you’ll receive notice before any change takes effect.⁵

Filing on time earns a small collection allowance: 0.73% of the tax collected if annual collections are under $60,000, 0.53% for collections between $60,000 and $600,000, and 0.26% above $600,000. It offsets some of the cost of acting as the state’s tax collector.

Common Exemptions and How to Handle Certificates

Not every sale owes 7%. Several categories are exempt, and if you sell to wholesalers, manufacturers, farmers, or nonprofits, you’ll see them often.

Resale

Goods bought for resale are exempt. The tax is meant to hit once, at the final sale to the consumer, so a retailer buying inventory from a wholesaler doesn’t pay tax on that purchase. The buyer must provide a valid exemption certificate to claim the treatment.

Manufacturing Equipment

Machinery, tools, and equipment used directly in manufacturing are exempt, along with material-handling equipment that moves raw materials into production. Equipment that only indirectly supports production, like office furniture in a factory’s administrative area, doesn’t qualify.⁸

Agricultural Production

Seeds, fertilizers, pesticides, and similar inputs consumed directly in agricultural production are exempt when bought by someone occupationally engaged in farming, floriculture, horticulture, or related fields. The exemption also covers custom farming services, such as a contractor hired to apply fertilizer on agricultural land.⁹

Nonprofits and Government

Purchases by qualifying nonprofits are exempt when the goods or services are used to carry on the organization’s nonprofit purpose. Eligible groups include religious organizations, charities, hospitals, public and parochial schools, labor unions, and other entities organized exclusively for religious, charitable, scientific, literary, educational, or civic purposes. The organization cannot operate primarily for social purposes or channel income to any member or employee.¹⁰ Sales to state and local government agencies are generally exempt when the purchase serves a governmental function.

Handling the Paperwork

When a buyer claims exemption, they must provide a completed General Sales Tax Exemption Certificate, Form ST-105. All five sections must be filled in, including the purchaser’s name, address, and Registered Retail Merchant Certificate number. An incomplete certificate is invalid, and the seller becomes liable for the uncollected tax.¹¹

Sellers who accept an incomplete form have 90 days after the sale to obtain a fully completed certificate or enough information to complete it themselves. If the department later requests verification during an audit, you have 120 days from the request to produce a completed certificate or otherwise prove the transaction was exempt. For ongoing relationships, blanket exemption certificates covering all qualifying purchases over a stated period are allowed, so a wholesale customer doesn’t need a fresh form every order.¹² Keep every certificate for at least three years, the general assessment period for Indiana tax.

Digital Products and Software

Specified digital products such as downloaded music, movies, and e-books are taxable at 7% when permanently transferred to an end user. Digital codes redeemable for those products are taxed the same way. Prewritten computer software and its updates are also taxable when downloaded.¹³

Cloud-based software accessed remotely over the internet, without any download to the user’s computer, is not taxable in Indiana. Subscriptions to software-as-a-service platforms and browser-based applications fall outside the sales tax.¹³ The downloaded-versus-hosted distinction is what drives the tax outcome, so how a software purchase is structured has real consequences.

Use Tax on Purchases Where No Sales Tax Was Collected

Use tax is the companion obligation. If you buy tangible goods for use, storage, or consumption in Indiana and the seller didn’t charge at least 7% sales tax, you owe use tax at the same 7% rate.⁵ Common triggers include purchases from out-of-state vendors not registered in Indiana, online purchases with no tax charged, and items pulled from your own inventory for personal use or giveaways.

If you paid sales tax to another state on the same purchase, Indiana credits that amount and you owe only the difference. Buy equipment in a 5% state and bring it to Indiana, and you owe 2%.⁵

Voluntary reporting keeps the cost to just the tax. If the department discovers the underpayment first, you’ll owe a 10% penalty plus interest on top.⁵

Penalties and Personal Liability

Late payment triggers a 10% penalty on the unpaid tax, plus interest at a rate currently set at 2% above the statutory baseline.¹⁴ Across multiple missed filing periods, that compounds quickly.

The exposure most business owners don’t expect is personal. Under Indiana law, an individual retail merchant, or any employee, officer, or member of a corporate or partnership retail merchant with a duty to remit sales or use tax, holds those collected taxes in trust for the state. That person is personally liable for the tax, penalties, and interest, and the state can reach personal assets, not just business accounts. Knowingly failing to collect or remit the tax is a Level 6 felony.¹⁵

The trust concept is the key detail. Sales tax you collect from customers was never your money. Spending it on payroll or rent doesn’t excuse the liability; it accelerates it.

If You Should Have Been Registered but Weren’t

The Department of Revenue runs a voluntary disclosure program for businesses that should have been collecting Indiana sales tax and weren’t. Coming forward before the department contacts you is significantly less painful than being found. The program typically limits the look-back to three years of unfiled returns, waives the 10% late-payment penalty in full, and lets you work through a tax representative anonymously during the initial application. Interest on the unpaid tax generally isn’t waived, and you’ll usually have 60 to 90 days after reaching an agreement to file the back returns and pay what you owe.

To qualify, your business must not have been previously registered for the tax type in question and must not have already been contacted by the department about the liability. If you were previously registered and simply stopped filing, you’ll need to negotiate directly outside the program, which typically means the full penalty and interest calculation.

1
Indiana Department of Revenue. Indiana Department of Revenue Form BT-1 – Business Tax Application
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Indiana Department of Revenue. Remote Seller
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Indiana Department of Revenue. DOR: Marketplace Facilitators
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INBiz. INBiz – Indiana’s One Stop Source for Your Business
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Indiana Department of Revenue. Business FAQ
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Indiana Department of Revenue. DOR: Filing Deadlines
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Indiana Department of Revenue. Sales Tax Forms
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Indiana General Assembly. Indiana Code Title 6 Article 2.5 Chapter 5 Section 6-2-5-5-3
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Indiana General Assembly. Indiana Code Title 6 Article 2.5 Chapter 5 Section 6-2-5-5-5.1
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Indiana General Assembly. Indiana Code Title 6 Article 2.5 Chapter 5 Section 6-2-5-5-25
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Indiana Department of Revenue. General Sales Tax Exemption Certificate Form ST-105
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Indiana General Assembly. Indiana Code Title 6 Article 2.5 Chapter 8 Section 6-2-5-8-8
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Indiana Department of Revenue. Sales Tax Information Bulletin 93
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Indiana Department of Revenue. Fines, Fees and Penalties
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Indiana General Assembly. Indiana Code Title 6 Article 2.5 Chapter 9 Section 6-2-5-9-3