Buy vs Lease Equipment Calculator

Depends on multiple factors. Buying better hai agar: Equipment long-term use mein rahega (5+ years), depreciation tax benefit maximize karna hai, resale value significant hai, cash flow sufficient hai. Leasing better hai agar: Technology quickly obsolete hoti hai (IT equipment, medical devices), capital preserve karna hai, off-balance sheet treatment chahiye, predictable monthly costs preferred hain. faydemand.in calculator Total Cost of Ownership compare karta hai dono options ke liye specific equipment aur tenure pe.

Equipment khareedne pe tax benefits: (1) Depreciation under Income Tax Act — WDV method ya straight line. Block of assets concept. New equipment: 15% general depreciation, computers/servers: 40%, vehicles: 15-30%. (2) If loan taken: Interest expense fully deductible as business expense. (3) GST input tax credit — agar registered supplier se kharida to ITC claim kar sakte ho. Purchase cost over multiple years recover hota hai through depreciation.

Equipment leasing ke tax benefits: (1) Entire lease rental payment fully deductible as business expense in the year of payment — no depreciation calculation complexity. (2) Operating lease: Full payment expense, asset not on books — cleaner P&L. (3) Finance lease: Asset on books, depreciation claimed. (4) GST: Lease rentals pe 18% GST but ITC available agar business registered. Leasing ka tax benefit simpler hai — every lease payment directly reduces taxable income.

Operating Lease: Short-term, cancellable, asset stays with lessor on balance sheet. Lessee just pays usage fees. Simple expense deduction. Examples: Office space, vehicles on monthly rental. Finance Lease (Capital Lease): Long-term, non-cancellable, essentially buying on installments. Asset on lessee's balance sheet. Ownership risk transfers to lessee. Depreciation claimed by lessee. India mein Ind AS 116 ke under operating vs finance lease accounting rules defined hain for larger companies.

India mein Written Down Value (WDV) method most commonly used hai under Income Tax Act. Formula: WDV beginning year × Depreciation Rate = Annual Depreciation. Block of assets concept: Same category ke sab assets ek block mein. New purchase adds to block, sale reduces block. Rates: Computers/IT equipment: 40%. Furniture: 10%. General plant & machinery: 15%. Vehicles: 15-30%. First year: Half depreciation in year of purchase (if bought after Oct 3). Buildings: 5-10%.

Leasing makes more sense when: Technology rapidly changes (computers, medical imaging, telecom equipment) — leasing ensures always latest tech without stranded asset risk. Capital-intensive purchases would strain working capital. Business is growing rapidly — assets on operating lease do not appear as debt on balance sheet. Equipment usage highly variable — pay-per-use models available. Short business contracts — do not want long-term asset commitment. Tax benefit of full lease rental deduction exceeds depreciation benefit.

Total Cost of Ownership (TCO) = All costs associated with owning/using equipment over its life. For buying: Purchase price + financing cost (loan interest) + maintenance + insurance + repair + opportunity cost of capital minus tax savings (depreciation) minus residual/scrap value. For leasing: Total lease payments + maintenance (if lessee pays) + penalty charges + opportunity cost savings (capital freed up). TCO comparison shows true financial cost of each option — faydemand.in calculator ke liye ye primary metric hai.

Haan — leasing particularly beneficial for startups: Capital conservation — scarce capital preserve karo growth ke liye instead of asset purchase. No collateral requirement often — operational leases don't need security deposit like loans. Off-balance sheet (operating lease) — debt-to-equity ratio better dikhta hai investors ke liye. Upgrade flexibility — technology-intensive startups need latest equipment. India mein equipment leasing companies: L&T Finance, HDFC Leasing, Tata Capital, Bajaj Finance — all offer equipment lease products.

Sale and Leaseback: Company apna owned equipment sale karti hai leasing company ko, phir same equipment lease pe wapas leti hai. Benefits: Immediate cash inflow (capital release from asset), continue using same equipment, lease payments tax-deductible. Use case: Working capital need, balance sheet optimization, unlock capital from existing assets. Risk: Long-term lease commitment, higher total cost vs ownership. faydemand.in calculator sale-leaseback scenario bhi model kar sakta hai.

GST on equipment purchase: 12-28% depending on category. ITC available for business use. GST on lease: 18% on lease rentals. ITC available. Net GST impact often similar for both options — ITC offsets the tax paid. However: Cash flow difference — purchase GST paid upfront (large amount), lease GST spread over rental payments. For capital-constrained businesses — leasing spread GST payment is better for immediate cash flow. faydemand.in calculator net GST impact for both options includes in TCO calculation.