Cigarette sales in Kerala have been seriously hit, as traders on Monday began the indefinite suspension of sales of tobacco products to press their demand that manufacturers pay all taxes in advance and include them on the Maximum Retail Price (MRP) shown on the packets.

Reports from across the state said wholesalers have stopped taking fresh stocks, but that retailers were selling cigarettes to exhaust pending stocks.

The protest action was called by the Kerala Vyapari Vyvasayi Ekopana Samiti, the state-level body of traders, which wanted the manufacturers to bear the 12.5 per cent Value Added Tax levied on cigarette and other tobacco products.

The state government had given an option to manufacturers to have all taxes paid before fixing the MRP, but they had refused to comply with it, Samiti president T Naseeruddin told PTI in Kozhikode.

According to trading circles, the manufacturers' stand had affected the profit the traders would get from tobacco product sales.

Naseeruddin said retailers were put to severe hardship as they get a profit of only Rs 3.25 on selling cigarettes worth Rs 700.

"Not only that, if retailers sell cigarettes at a price quoted more than the MRP, they will be prosecuted," he said.

Expressing the hope that the ongoing talks between finance minister Thomas Isaac and company representatives in Thiruvananthapuram would help sort out the issue amicably, he said the retailers were firm on their decision to stop sales once pending stocks were exhausted.

On an average, cigarettes worth Rs 3 crore (Rs 30 million) are sold in the state daily, which works out to Rs 1,000 crore (Rs 10 billion) annually.