Medical equipment is often the single largest cheque a hospital, diagnostic centre or specialist clinic writes. An MRI or a cath lab can cost more than the building it sits in, and even a dental chair with imaging or an ophthalmic laser is a significant investment for a small practice. The real question is usually not whether to finance the equipment but how: borrow and own it, or lease it and pay rent.
This guide explains both routes, the tax and GST points that change the maths, and the regulatory steps that affect when the equipment can start earning. For the wider funding picture, including buildings, working capital and loans against property, see how to fund a hospital, nursing home or clinic.
How does a medical equipment loan work?
An equipment loan is a term loan to buy a specific machine. The main features are usually these.
- Hypothecation. The equipment is the primary security. You own it, but the lender holds a charge on it until the loan is repaid. Lenders may also ask for collateral or a guarantee, depending on the amount and your profile.
- Margin. The lender funds most of the cost and you pay the rest. Indian Bank's IND Health Care scheme sets a 25% margin on machinery term loans. SBI's Healthcare Business Loan sets 20% on term loans.
- Tenor tied to useful life. Repayment is matched to how long the machine will earn. Indian Bank allows up to 84 months for medical equipment, with up to 6 months' moratorium, and SBI also caps the equipment moratorium at 6 months.
- Disbursement against quotation. Lenders typically pay the supplier directly against a proforma invoice, after checking the quotation and, where relevant, regulatory permissions.
The lender will want to see that the machine pays for itself. Expect questions on projected scans or procedures per day, referral sources, pricing, the radiologist or technician you will hire, and the annual maintenance contract.
Leasing medical equipment: operating lease vs finance lease
With a lease, a leasing company or the lender owns the equipment and you pay rentals to use it. Broadly, there are two types.
| Compared on | Equipment loan | Finance lease | Operating lease |
|---|---|---|---|
| Who owns it | You, from day one, with the lender's charge on it | The lessor, with most risks and rewards passing to you; often a purchase option at the end | The lessor, which keeps the risks and rewards |
| Upfront cash | Margin money | Usually lower than a loan margin | Usually the lowest |
| Term | Close to the machine's useful life | Most of the useful life | Shorter than the useful life |
| End of term | You keep the machine | Buy it, extend, or return it, as agreed | Return, upgrade or renew |
| Technology risk | Yours | Mostly yours | Shared with or kept by the lessor |
| On your books | Asset and loan | Generally recorded like an asset and a loan | Depends on the accounting standard you follow |
Operating leases suit equipment that dates quickly or that you may want to upgrade, such as high-end imaging, or situations where you want to keep borrowing limits free for a building or expansion. Loans usually work out cheaper over the long run for equipment you expect to use for its full life, such as dialysis machines, dental chairs or basic X-ray.
Lease terms vary widely by lessor. Read the clauses on end-of-term value, maintenance responsibility, insurance and early termination as carefully as the rental figure.
GST: why hospitals usually can't recover it
This point is often missed. Health care services by a clinical establishment, an authorised medical practitioner or paramedics are exempt from GST under Notification 12/2017-Central Tax (Rate). Because the output is exempt, input tax credit is generally not available, including on capital goods.
In practice:
- GST you pay on buying equipment is a real cost, not a credit you recover later.
- GST charged on lease rentals is also a cost, spread over the term.
- If part of your business is taxable (for example, certain non-exempt services), the treatment can differ. Get your chartered accountant to work out the position for your facility.
There is some good news. From 22 September 2025, GST on many medical instruments and apparatus, including electro-medical equipment (heading 9018) and X-ray-based apparatus (heading 9022), was cut from 12% to 5%, following the GST Council's 56th meeting. Check the current rate on your specific equipment with your supplier.
Depreciation and income tax
When you own the equipment (bought outright or with a loan), you claim depreciation. Two points matter.
- Higher rate for listed life-saving equipment. In the Income Tax Act, 1961's depreciation table, general plant and machinery was depreciated at 15%. Listed life-saving medical equipment, such as MRI systems, colour Doppler, haemodialysis equipment, cobalt therapy units and certain defibrillators, got 40%. The 40% rate applies only to the listed items, not to every machine in a hospital.
- New Income-tax Act from 1 April 2026. Depreciation now falls under section 33 of the Income-tax Act, 2025, which allows depreciation at the percentage "as may be prescribed". If an asset is put to use for less than 180 days in the year, only half the rate is allowed. Confirm with your CA how your specific equipment is classified under the new rules before you build the 40% rate into your projections.
With a true operating lease, the lessor owns the asset and claims depreciation, and you generally treat the rentals as a business expense. How a finance lease is treated depends on how it is structured. This is an area where professional tax advice pays for itself.
Which approvals are needed before the equipment can be used?
Lenders and lessors will want to know that the machine can legally operate on the date your projections assume.
- AERB for X-ray-based equipment. This includes CT, cath labs, mammography, general X-ray and dental X-ray. You must buy type-approved or NOC-validated equipment from authorised suppliers, after obtaining AERB procurement permission. No diagnostic X-ray equipment may be used on patients without an AERB licence for operation. CT and interventional rooms also need a separate shielded control room, and AERB's licensing process asks for a room layout and a Radiological Safety Officer for these facilities. Applications go through AERB's eLORA portal.
- MRI. MRI does not use X-rays, so AERB's X-ray licensing does not apply in the same way. You still need site planning for shielding, power and cooling.
- Ultrasound has its own registration requirements under separate law. Check them before you order.
- Facility approvals. Equipment is usually installed in a registered facility with biomedical waste authorisation and fire NOC. See the approvals list in our hospital funding guide.
Build these timelines into the loan's moratorium. A machine sitting idle while waiting for a licence still carries interest.
Equipment-by-equipment: what to think about
| Equipment | Typical funding considerations |
|---|---|
| MRI | Very high cost and site-preparation spend; on the old Act's 40% list; lease or long-tenor loan; strong referral base needed |
| CT scanner | AERB procurement permission and licence, RSO, shielded room; tube replacement costs to budget for |
| Cath lab | AERB licence (interventional radiology); needs cardiologists on board; usually part of a larger hospital funding plan |
| Dialysis machines | Lower ticket per unit, steady utilisation; haemodialysis equipment was on the old 40% list; often scheme- or insurance-funded patients, so watch receivables |
| Dental equipment | Chairs, CBCT or OPG; X-ray units need AERB registration or licence; often funded with small-ticket, CGTMSE-backed loans |
| Ophthalmic equipment | Diagnostic and laser systems; check the vendor's service support and upgrade path |
Vendor and OEM finance tie-ups
Many manufacturers and dealers have arrangements with banks or NBFCs, and some offer their own financing. These can be convenient and quick. Before you sign:
- Compare the total cost, including processing fees, insurance and the AMC, with an independent bank loan.
- Check whether a "low-cost" offer is built into a higher equipment price.
- Make sure the loan or lease doesn't tie you to one vendor for consumables or service longer than you want.
Refurbished and pre-owned equipment
Refurbished machines can cut costs sharply, but they come with more checks.
- AERB rules still apply. Pre-owned X-ray equipment needs an application for "Procurement of pre-owned X-ray equipment" on eLORA, an installation and QA report from the supplier, and a licence for operation.
- Imported refurbished equipment is tightly controlled. It falls under the Hazardous and Other Wastes Rules, 2016. In October 2024, the environment ministry issued a revised list of 38 items, including MRI and CT, that can be imported with at least seven years' certified residual life and warranty and maintenance commitments. The rules on selling such equipment have been under review since, so check the current position with your supplier.
- Lenders are more cautious. Expect a valuation, a shorter tenor and possibly a higher margin than for new equipment.
Can a small clinic get equipment finance without collateral?
Often, yes. Clinics and diagnostic centres registered as micro or small enterprises on Udyam can benefit from CGTMSE, which guarantees collateral-free credit of up to ₹10 crore per borrower. Under its hybrid model, the lender can take collateral for part of the loan and get guarantee cover on the rest. SBI's healthcare loan offers nil collateral up to ₹2 crore with CGTMSE cover, and Indian Bank allows nil collateral on eligible loans covered by CGTMSE. The guarantee is at the lender's option and carries a fee.
If you own property, a loan against property is another way to fund equipment, especially several smaller items at once.
Loan or lease: a quick checklist
- Will you use it for its full life? A loan is usually better.
- Is the technology likely to date in a few years? Consider an operating lease.
- Do you need to keep bank limits free for a building or expansion? Leasing helps.
- Can you use the 40% depreciation? Ownership may be worth more than it first appears.
- Is GST a cost for you? Compare loan and lease on an all-in basis, including GST.
How Biz Corp Solutions helps
We help hospitals, diagnostic centres and clinics compare equipment loans, leases and vendor offers, size the margin and tenor, line up the documents lenders ask for and approach suitable banks, NBFCs and financial institutions. We keep you updated through to sanction, and the lender makes the final decision on terms. Learn more about our hospital funding service, or read about choosing between a bank and an NBFC.