Indiana Sales Tax Exemption
Indiana offers a utility sales tax exemption on electricity, natural gas, and water when used directly in qualifying production activities. This is authorized under Indiana Code § 6‑2.5‑5‑5.1.
Qualifying Activities
The exemption applies when utilities are used as a material in the direct production of tangible personal property in the course of activities such as manufacturing, processing, refining, repairing, mining, agriculture, horticulture, floriculture, or arboriculture.
Predominant Use Requirement
A predominant use study must show that over 50% of the utility from a specific meter is consumed by exempt production activities. If 50% or less qualifies, a partial exemption may be available via refund.
Utility Study
A detailed utility (predominant use) study is required. This study must list all devices on each meter, classify them by production use, and show annual consumption for each. Inaccurate or incomplete studies may result in denial.
Filing Requirements
To claim the exemption, businesses must submit Form ST-200 (Utility Sales Tax Exemption Application) to the Indiana Department of Revenue. Once approved, the department issues Form ST-109, which must be provided to the utility provider to apply the exemption on the specific meter. If sales tax was previously paid on qualifying utility usage, businesses may file a refund claim using Form GA-110L for up to 36 months retroactively. Proper documentation, including a detailed utility study, is required to support both exemption claims and refund requests.