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 and trader C sells it to a customer at a profit of Rs 1,300. If the rate of VAT is 8% , find: i) the amount of VAT received by the state govt on the sale of this machine, ii) the amount that the consumer pays for the machine.

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The total amount of VAT paid should be Rs 1168.  The final buyer should be paying Rs 22968 for the washing machine.  Here is how to derive this answer:

A sells the washing machine to B for 12500 plus Rs 1000 in VAT (12500*.08).  So B pays Rs 13500.

B adds to that Rs 800 of profit and sells it to C.  The VAT on this transaction is 800*.08 = 64.  So now the total VAT so far is 1064.  The price that C pays is 13500 + 800 + 64 = 21564.

C adds Rs 1300 to the price, making 22864.  He pays VAT on the 1300 (1300*08 = 104).  So now the total VAT is 1168 Rupees.  22864 + 104 = 22968

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