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Making good on his State of the State promise to provide clarity on the previously murky topic of software-as-a-service (SaaS) and its sales tax status, today Governor Holcomb signed Senate Bill 257 into law.
Additionally, software subscriptions services are considered tangible property and are subject to sales and use taxes. Prewritten software delivered electronically is not subject to tax.
The sale of electronic data products such as software, data, digital books (eBooks), mobile applications and digital images is generally not taxable (though if you provide some sort of physical copy or physical storage medium then the sale is taxable.) (Source: California BOE Publication 109 Non Taxable Sales).
Sales of custom software - delivered on tangible media are exempt from the sales tax in Indiana. Sales of custom software - downloaded are exempt from the sales tax in Indiana.
The retail sales of all magazines and periodicals are subject to the sales tax. Sales of magazines by subscription are subject to sales tax without regard to the price of a single copy. Sales tax must be collected on the full subscription price by the seller from the person who subscribes to the magazine. 2.
A subscription to an online database that allows the customer to download reports, documents, and other information, is not subject to sales or use tax. For more information, please refer to Sales Tax Information Bulletin #93.
A software subscription agreement (also referred to as a software license agreement) is a contract that exists between the manufacturer of the software (the licensor) and the individual or company that purchases it (the licensee).
A subscription to an online database that allows the customer to download reports, documents, and other information, is not subject to sales or use tax.
Sales of canned software - downloaded are subject to sales tax in Indiana. Sales of custom software - delivered on tangible media are exempt from the sales tax in Indiana. Sales of custom software - downloaded are exempt from the sales tax in Indiana.
In addition, licenses for the use of software accessed electronically are not considered sales of tangible personal property, and therefore are not subject to state sales tax, as long as no transfer of tangible personal property occurs as a part of the transaction.