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2 A lease represents a contractual arrangement
where the lessor grants the lessee the right to use
an asset in return for periodical lease rental
payments.
2 The arrangement between two parties, the
leasing company or lessor and the user or lessee.
    

2 `inancial Lease
2 Operating Lease

2 Leverage Lease

2 Sale and Lease back

2 Cross Border Lease

 

  

2 Contractual period between lessor and lessee is

less than full economic life of equipment i.e.
short-term in nature.
2 The lease is terminable by giving stipulated
notice as per the agreement.
2 The risk of obsolescence is enforced on the lessor
who will also bear the cost of maintenance and
other relevant expenses.
  
  

2 Arrangement for assets of huge capital outlay

2 Lessor acquires the asset with maximum
contribution up to 50% and rest is financed by
lenders secured by mortgage of the asset besides
assignment of leased rental payments.
2 Parties involved are (a) Lessor (Max. 20 ² 50%
stake) (b) Lessee (As in operational lease) (c)
Lenders (Rest stake holders)
  
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2 Arrangement where a firm which has an asset

sells it to leasing company / lessor and gets it
back on lease.
2 Lessee gets the sale price in the market value
and gets the right to use the asset during the
lease period.
2 Title of the asset remains with the lessor.
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2 ët is international leasing and is referred

otherwise as transactional leasing.
2 ët is international leasing and is referred
otherwise as transactional leasing.
2 Relates to lease transaction between different a
lessor and lessee domiciled in different countries.
 

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2 ërrevocable and non-cancellable contractual

agreement.
2 Lessee uses the asset exclusively for a relatively
longer period, maintains it, insures and avails of
the after sales service and warranty backing it.
2 Lessee bears the risk of obsolescence as it stands
committed to pay for entire lease period
 

 
  

  
 


 
Permit alternative use of funds
`aster and cheaper credit
`lexibility
`acilitate additional borrowing
Protection against obsolescence
Boon to small firm

Lease rentals are
payable soon after
entering into lease
agreement while in
new projects cash
generation may start
after gestation
period.
The cost of financing
is higher than debt
financing.
ëf the lessee defaults
in payment, lessor
would suffer a loss.
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2 £nder Section 148 of ëndian Contract Act leasing

is executed.
2 The lessor has the duty to deliver the asset to
lessee, legally authorizes lessee to use the asset.
2 The lessee has the obligation to pay the lease
rentals as per lease agreement, to protect lessor·s
title, to take reasonable care of the asset, and to
return the leased asset on the expiry of lease
period.
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2 The leased asset is shown on the balance sheet of

the lessor.
2 Depreciation and other tax shields associated
with leased asset are claimed by the lessor.
2 The entire lease rental is treated as an income in
the books of the lessor and expense in the books
of lessee.
   
    


2 The lessee can claim lease rentals as tax

deductible expenses.
2 The lease rentals received by lessor are taxable
under the head of ´Profits and Gains of Business
or Professionµ
2 The lessor can claim investment allowance and
depreciation on the investment made in leased
assets
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2 type of instalment credit

2 repayment of principal as well as interest,
with an option to purchase
 

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Option to user No option is provided Option is provided to
to the user to purchase the goods
purchase the goods.

Nature of Lease rentals paid by Only interest

expenditure the lessee are element
entirely revenue included in the HP
expenditure by lessee instalments is
revenue
Expenditure

Components Lease rentals HP instalments

comprise of comprise
2 elements of 3 elements
1. finance 1.normal
charge and trading profit
2. capital 2. finance
Recovery charge
3. recovery of
cost of goods/assets
 


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 ëL & `S :AN OVERVëEW
2 ënfrastructure Leasing & `inancial Services
Limited (ëL&`S) is one of ëndia's leading
infrastructure development and finance
companies
2 ëL&`S was promoted by the Central Bank of
ëndia (CBë), Housing Development `inance
Corporation Limited (HD`C) and £nit Trust of
ëndia (£Të)
 LEASëNG SECTORS
2 Transportation
2 Area Development
2 Cluster Development
2 `inance
2 Power
2 Ports
2 Water and Waste Water
2 £rban ënfrastructure
2 Environment
2 Education
2 Tourism
BALANCE SHEET
2 Thank You