How VAT is calculated?

VAT means Value added Tax.

For each commodity, the VAT may be different.
Moreover, VAT may be different for the same item, in different states in a country.
For example, VAT for cardamom is 2% in Tamilnadu. But it was 5% in Kerala.( In March 2013, kerala reduced VAT for cardamom to 2% in line with Tamilnadu)

Who will pay VAT?

Suppose I purchased 1kg cardamom from a wholesale dealer for Rs.1000 . He will charge 2% VAT on me.
ie I will pay Rs.1020 to my seller.
When I sell this 1kg to my customers for Rs.1050, I will charge 2% from my customers. ie
I will get Rs.1050+21 from my customer.
But I will not pay Rs.21 to the Government. for this 1 kg, my seller has already paid Rs.20, and I will pay Rs.1 to the Government.