Indiana – Agricultural Production Exemption

SALT Report 1501 – The Indiana Department of Revenue issued an updated bulletin regarding exemptions for agricultural production.   Indiana law provides several exemptions relating to agricultural production. These exemptions are limited to purchases of animals, feed, seed, plants, fertilizer, insecticides, fungicides, and agricultural machinery, tools, and equipment.  These items must be directly used in the production of food or commodities that will be sold for human consumption or resold for further food or commodity production.
Animals, Feed, Seeds, and Farm Products
Purchases of animals, animal feed, seeds, fertilizer, plants, insecticides, fungicides, and other items are exempt from sales and use tax if the following conditions are met:
  • The person, company, partnership, or corporation acquiring the property must directly use the property in the production of food or commodities for sale, and
  • The person must be occupationally engaged in the production of food or commodities sold for human or animal consumption or for further use in food or commodity production

Agricultural Machinery, Tools, Equipment, and Buildings

Purchases of agricultural machinery, tools, and equipment are exempt from sales and use tax if the items are directly used in the production, extraction, harvesting, or processing of agricultural commodities. These items must have an immediate effect on the commodity produced.

The exemption applies to machinery, tools, and equipment used:

  • To feed exempt animals, plant seeds, fertilize crops, and apply insecticides and fungicides,
  • To move a crop from the field where it was grown and harvested to equipment for temporary storage for further processing,
  • To move exempt items such as seeds, plants, fertilizers, insecticides, and fungicides from temporary storage to a location where such will be used in an exempt process, and
  • By the purchaser directly in feeding exempt animals

Utilities

Indiana law provides an exemption for the purchase of the following utilities:

  • Electrical energy,
  • Natural and artificial gas,
  • Water, and
  • Steam or steam heat

The utilities listed above are exempt from tax if they are directly used in the production of agricultural commodities.

Exemption Certificates

Two types of exemption certificates can be used to purchase exempt agricultural use property.

Form ST-105 – Indiana general sales tax exemption certificate allows property to be purchased exempt from tax if it meets the agricultural exemption guidelines.

Form F0003 – Is an exemption certificate issued by states participating in the Streamlined Sales and Use Tax Agreement. This form should be accepted by Indiana retailers and can be used by nonresident purchasers.

For Further Information:

Indiana Department of Revenue – Information Bulletin #9