VAT (Value Added Tax)....Manufacturer A sells a washing machine to a trader B for Rs 12,500. Trader B sells it to a trader C at a profit of Rs 800...

The manufacturer sells the washing machine at Rs 12500 to B. So Rs 12500 is incusive of 8% Vat.

B should get  a profit of  Rs 800 and sell at a price which includes that vat also . So he sells the WM at Rs [12500+800(1+8/100)]

Similarly C should sell for price with profit Rs 1300 means his selling price  including a Vat of Rs1300*8/108 should be

Rs[12500+800(1+8/100)+1300(1+8/100)] = Rs(12500 +2100*108/100)= Rs(12500+2468) = Rs14768 which is inclusive of 8%

Therefore the 8% included VAT paid is 14768*8/108 = Rs 1093.93 of which

12500*8/108 =  925.93 is paid by manufacture,

(800+8%800)*8/108  = Rs 64 Paid by B  and

(1300+8%of1300)*8/108 = Rs 104 is paid by C.

And the consumer pays 925.93+64+104 = Rs1093.93 VAT (through the sellers to the the government)  which is included in the price Rs14768.

Here, selers pay the VAT to government, but they recover it from the consumer.