RATE OF SALES TAX:
7.00%
LOCAL & COUNTY MAXIMUM RATES:
None
Table of Contents
What Are the Taxable Goods and Services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Indiana.
Traditional Products and Services
Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Indiana.
Groceries and prescription medications are tax-free purchases.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in Indiana are required to collect sales tax on the sale of digital products or services.
How to Sign Up for Indiana Sales
If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
Your expected monthly taxable sales; if you leave this field blank, you will be a monthly filer.
If your business is seasonal.
If you give housing for a period of fewer than 30 days.
If you intend to sell food and beverages.
If you want to offer alcoholic drinks, provide your ABC Permit number and expiry date.
If gasoline is sold through a metered pump.
If vehicles weighing less than 11,000 pounds will be hired from this location for fewer than 30 days.
If you make money from the selling of tobacco goods.
If so, just from vending machines.
Is this place included in your consolidated sales tax report?
If you want your sales tax returns sent to another address.
A Resale Certificate might help you save money.
When acquiringitems for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Sales inside the state
It is simple to calculate sales tax on products sold in Indiana. Simply apply a flat 7.000% sales tax rate to all products, whether sold in-store or shipped across the state.
Out-of-State Purchases
Indiana firms must only pay sales tax on out-of-state transactions if they have a presence in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your Indiana seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in Indiana are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Annual filing: If your company receives less than $25 in sales tax each month, you should submit returns on an annual basis.
Monthly filing: If your company receives $1000 or less in sales tax every month, you must submit returns on a monthly basis.
Early Filing: If your company receives more than $1000 in sales tax each month, you should submit your taxes as an early filer. An early filer is required to file their tax return 10 days earlier than a monthly filer:
20 days after the deadline vs. 30 days after the deadline
Deadlines for Filing
The deadline for all Indiana sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:
Penalties for Filing Late
If a firm fails to submit their return or underpays the amount provided by the tax return, Indiana imposes a late filing/payment penalty of 10% of the tax owing on the tax return.
If a firm fails to submit its tax return within 30 days after receiving a notice to file, Indiana imposes a non-filing penalty equivalent to 20% of the unpaid tax. Once this penalty is imposed, it is the sole penalty imposed on the company.
For any unpaid tax or penalty, the state levies an interest rate of 3.0% per year or 0.25% each month or partial month.