Lease Liability
The obligation to make future lease payments, recognised on the balance sheet along with a corresponding right-of-use asset.
Formula
Lease Liability = Present Value of Remaining Lease Payments, discounted at the incremental borrowing rate
Unit
₹ crore
In depth
Ind AS 116 ended the distinction between operating and finance leases for lessees, so almost every lease now appears as debt on the balance sheet. The change transformed reported leverage for retailers, airlines and hospital chains overnight without a rupee of new borrowing being taken. It also shifted costs within the profit and loss statement: rent disappeared from operating expenses and reappeared as depreciation plus interest, which mechanically raised EBITDA. Comparing a company's EBITDA before and after the standard, or against a peer using a different framework, is therefore comparing different things.
Worked example
A company leasing stores at ₹50 crore a year for eight years recognises a liability of roughly ₹290 crore at an 8% discount rate. EBITDA rises by the ₹50 crore of rent removed, while depreciation and interest rise by a similar total — the same business, a very different margin.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Lease Liability” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.