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Lease vs Buy
The benefits of leasing?
Leasing is a very cost-effective way to invest in business equipment. In addition to its many benefits this option competes very well in simple monetary terms.
More on the benefits of leasing
Lease v Buy
By leasing equipment your business could benefit from tax relief on the profits you earn.
Tax relief is also available for cash purchases, so have a look at the examples below to see what is best for you:
| Assumptions: | Equipment Cost (₹) – 15,00,00 | |
| Private ltd, Term (Tenure)- 5 years, Sec. Dep- 20% | ||
| 60 monthly payments of ₹ 45,000 | ||
| Tax relief @ 25% | ||
| Lease Rental | ||
| Year | Monthly Payments | Tax Relief @ 25% |
| 1 | ₹ 45,000 x 12 | ₹ 1,35,000 |
| 2 | ₹ 45,000 x 12 | ₹ 1,35,000 |
| 3 | ₹ 45,000 x 12 | ₹ 1,35,000 |
| 4 | ₹ 45,000 x 12 | ₹ 1,35,000 |
| 5 | ₹ 45,000 x 12 | ₹ 1,35,000 |
| Total Tax Relief | ₹ 6,75,000 | |
| Paying Cash | Depreciation on Capex – 15% | |
| Year | Capital Allowances/Depreciation Claim | Tax Relief @ 25% |
| 1 | 15% of ₹ 15,00,000 = ₹ 2,25,000 | ₹ 56,250 |
| 2 | ₹ 1,91,250 | ₹ 47,813 |
| 3 | ₹ 1,62,563 | ₹ 40,641 |
| 4 | ₹ 1,38,178 | ₹ 34,545 |
| 5 | ₹ 1,17,451 | ₹ 29,363 |
| Total Tax Relief | ₹ 2,08,611 |
Download PDFs
FAQs PDF
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Leasing Benefits PDF
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Notes: Equipment costs and monthly payments assume GST should be added. The above are for example purposes only and tax relief is based on 25%. Always consult your accountant or financial advisor to see what is best for your business.
Want to find out more about tax relief? Click here