In general, necessary and essential equipment used directly in the manufacturing process would qualify for the manufacturing exemption unless specifically excluded. While you did not provide specific information on the equipment, computer hardware, computer software, and printers used by the programmers to code the software would probably qualify. To claim the exemption, you should give your vendor an exemption certificate. Equipment used for nonmanufacturing purposes is a divergent use and requires your company to accrue and remit sales tax on the equipment's fair market rental value.
Sales tax has to be accrued for each divergent use.
In order to stop accruing tax for divergent use, tax has to be paid on the original purchase price of the equipment. A reduction in tax is not allowed for tax accrued on the equipment's fair market rental value for divergent uses. The statue specifically excludes from the exemption, property not used in the actual manufacturing, processing, or fabrication operation. When providing a service to repair, remodel, or restore manufacturing equipment, repair parts had to be separately stated to qualify for the exemption. Lump-sum repair charges of manufacturing equipment were taxable.