From indirect taxation point of view, the first and foremost expectation from the trade and the common man were - one road map for Goods and Service tax and two proposals to align the existing indirect taxes to the impending GST.

A quick peek into the indirect tax announcements show GST is conspicuous by its absence in the overall budget announcements. May be since the Constitution Amendment Bill is still pending in Rajya Sabha for its clearance, the FM chose not to dwell into this uncertain but most sought after tax reforms.

Fortunately, the services sector was spared from the much expected Service tax rate hike to a rate closer to the GST rate (say 16 per cent). However, a Krishi Kalyan Cess (KKC) @ 0.5 per cent on all or any taxable service will apply from June 1, 2016. KKC will be creditable and can be used to pay KKC. There is also proposal to introduce a new non creditable infrastructure cess ranging between 1 per cent to 4 per cent on luxury cars and SUVs. New cesses at a time when the expectation was to consolidate taxes into one tax is not understandable.

There were also proposals to rationalise service tax exemption. Notably, service tax will be exempt for construction of affordable houses upto 60 square meters. Services rendered to monorail and metro rail as well as services rendered by a senior advocate to an advocate will no longer be exempt.

From Cenvat credit point of view there seems to have been quite a number of rationalisation measures proposed. Clarity have been brought for determining the reversal of cenvat in respect of input/input service used commonly for providing exempted and taxable output service or exempted and taxable outputs.

There have been some positive amendments in cenvat credit rules allowing the brand owners to pass on the input service tax credits to job workers and contract manufacturers. This has been a long pending demand of the industry generally and especially the FMCG industry. This will help a seamless credit flow. On these lines, even a common warehouse is permitted to receive common inputs and transfer the inputs and credits to several manufacturing units of the tax payer.

There are number of changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in various sectors like IT hardware, capital goods, textiles, paper, etc. Going with the theme of sparing the lower segment of society, branded garments and jewellery will pay more excise duty.

High amount pending litigation seems to have caught up the attention of the FM. A new Indirect tax Dispute Resolution Scheme 2016 is introduced to cover the pending disputes at the level of Commissioner (Appeals). This scheme will provide option to the tax payers to pay off the disputed tax alongwith interest and 25 per cent of the penalty. Such taxpayers will be provided immunity from prosecution. Who will take this option is a moot question.

Time frame to issue Show Cause notices have been increased across the board, namely, from 1 to 2 years in the Customs and Central Excise and from 18 to 30 months in the case of Service tax. Not a very welcome move from taxpayer's point of view.

In conclusion, while there were some welcome initiatives in Cenvat credit rules, introduction new categories of Cesses do not resonate well with the objective of ever pending GST agenda.