SALT Report 3072 – The Indiana Department of Revenue updated an information bulletin regarding the sales and use tax exemption for research and development equipment to reflect that the exemption expired on June 30, 2013. However, a sales and use tax exemption for research and development property is now available for purchases that take place after June 30, 2013.
With regard to the new property exemption, there is no longer a requirement that the property have a useful life of one year or more. In addition, consumables and hand-powered tools are no longer excluded from the definition. Therefore, office supplies, consumables, hand powered tools, and repair parts are all examples of items that are exempt from sales tax as research and development property, so long as they will be directly used in research and development activities.
Lastly, the new property exemption applies regardless of whether the purchaser is the manufacturer or seller of the products that are result from the research and development activities.
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