Bengaluru: Ten days after the nationwide rollout of the Goods and Service Tax (GST), traders in Kerala are still resisting the new tax regime that has been billed as the biggest taxation reform in India since independence.

Merchants grouped under the Kerala Vyapari Vyavasai Ekopana Samithi (KVVES) decided to observe a token strike on Tuesday, after state finance minister T.M. Thomas Isaac rejected their demands in a discussion on Sunday.

Isaac said the government could not agree to unreasonable demands, which include allowing traders to sell at prices above the maximum retail price (MRP) and pausing GST’s implementation for three months.

Chicken merchants decided to shut their outlets down indefinitely starting on Monday after talks with the finance minister on Sunday failed to reach a consensus.

According to the government, the merchants have overpriced live chicken by 40% in the past week citing GST; the prices should have actually gone down because the tax marked a cut of 14%. The government has vowed to take strict action against traders who sell poultry beyond 87 per kg, which it thinks should be the fair price, but the unions, even those under the control of the ruling Communist Party of India (Marxist), refused to oblige.

The merchants were quoted by The Times of India on Monday as saying that it was impossible for them to sell chicken at the price set by the government. “We get it from Tamil Nadu for 87. How can we sell it for the same price? We are ready to fix the price at 100/kg,“ an association representative was quoted as saying.

According to KVVES president T Naziruddin, pausing GST’s implementation would be the best course of action given the confusion caused by complications in the new tax structure, which is causing a loss to traders.

Small traders need more time and support from the government because they have to make fresh investments to comply with the GST, such as in a computerized accounting system, he said.

To be sure, unrest among traders after the implementation of GST starting on 1 July has not been unique to Kerala. Textile markets in Gujarat are on an indefinite strike to protest 5% GST; in Tamil Nadu, protests prompted the government to roll back imposition of a 30% local body tax in addition to a 28% GST on movie theatres.

Economist Indira Rajaraman, in a column published in Mint on Friday, commented: “The damage is not a consequence of the GST itself, nor of any decisions taken by the GST council, which has functioned thus far in an admirably cooperative spirit. It is a consequence of the non-transparent legacy of the taxation system being replaced by the GST."

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