Medical equipment & machinery: lease vs term loan post-tax NPV calculator
When acquiring high-value MRI, CT, Cath Lab, robotic surgery or CNC machinery, hospitals and factories must choose between an equipment term loan (10% to 20% promoter margin, EMI repayment, and tax deductions on interest plus 15% WDV depreciation) and an equipment lease (zero down-payment, 100% tax-deductible lease rentals and an end-of-lease residual buyout). This calculator discounts every year's after-tax cash outflow to today's Net Present Value (NPV) so you can see which structure is genuinely cheaper.
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How this is calculated
Loan Annual Net Outflow = Annual EMI − Tax Rate × (Annual Interest + WDV Depreciation)
Lease Annual Net Outflow = Annual Lease Rental × (1 − Tax Rate) (+ Terminal Buyout in final year)
- Term Loan Cash Flows: Day-0 outflow equals
Equipment Cost × Margin %. Each year's outflow is the 12-month EMI minus the tax shield on reducing-balance interest and Written Down Value (WDV) depreciation. - Lease Cash Flows: Assumes zero Day-0 margin, full tax deductibility on annual lease rentals (
12 × Monthly Rental Factor % × Cost), and a terminal buyout in the final year. - NPV Discounting: Every year's net post-tax outflow is discounted by
(1 + Discount Rate)^Year.
Not a credit decision or tax/legal opinion. Figures are indicative and based on your inputs; confirm final sanction terms, tax applicability and statutory notifications with your lender, insurer or Chartered Accountant.
Questions people ask
How do tax shields differ between an Equipment Term Loan and an Operating Lease?
Under a Term Loan, you cannot deduct the principal EMI; instead, you claim annual interest paid plus Written Down Value (WDV) depreciation (typically 15% for general plant & machinery, or 40% for specified life-saving medical equipment). Under a true Operating Lease, 100% of the monthly lease rental is claimed as a revenue expense.
Why compare Net Present Value (NPV) instead of raw cash outflow?
Because a Term Loan requires an upfront 10% to 20% promoter margin on Day 0, whereas a lease spreads outflows across future years and adds a residual buyout in the final year. Discounting cash flows at your cost of capital (e.g. 10%) puts both options on an equal footing.
What is the residual value buyout at the end of an equipment lease?
Most medical and industrial equipment leases include an end-of-tenure residual value (often 5% to 10% of equipment cost) at which the hospital or manufacturer can purchase the asset.
Buying MRI/CT/Cath Lab equipment or factory machinery?
We arrange hospital equipment loans, vendor lease lines and industrial machinery term loans (₹50 lakh to ₹50 crore) with fast turnaround.
Tax treatment of operating vs finance leases under the Income-tax Act and Ind AS 116 depends on lease deed terms and ownership transfer clauses. Consult your CA. Lenders, regulators and government offices apply their own rules and may round or calculate differently; their figures prevail. Biz Corp Solutions arranges funding through partner banks, NBFCs and financial institutions, and lenders decide sanction, rates and terms. Last reviewed 23 October 2026.