Bike and Car Renting Laws in Kerala

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Posted on | by pritesh K

Table of Contents

1. Eligibility Criteria

To rent a vehicle in Kerala, the renter must meet the following requirements:

  • Age Requirement: Minimum age of 21 years.
  • Driving Experience: At least 2 years of driving experience with a valid driving license.
  • Documents Required:
    • Original driving license.
    • Proof of address (e.g., utility bill or bank statement issued within the past 3 months).
    • Booking voucher (digital or printed).

1. Age Requirement

  • Minimum Age: 21 years.
  • Ensure you are at least 21 years old to be eligible to rent a vehicle.

2. Driving Experience

  • Minimum Experience: 2 years.
  • You must have a minimum of 2 years of driving experience.

3. Documents Required

  • Original Driving License:
    • Provide a valid original driving license.
  • Proof of Address:
    • A utility bill (e.g., electricity, water, or gas bill) or a bank statement that has been issued within the past 3 months. This will serve as your address proof.
  • Booking Voucher:
    • A booking voucher, which can be either digital or printed, is required as proof of your reservation.

2. Terms and Conditions

Renters must adhere to the following terms:

  • Usage: The vehicle is to be used only for personal purposes and not for any commercial activities.
  • Prohibited Activities: Subleasing the vehicle, participating in motor sports, or using the vehicle under the influence of alcohol/drugs is strictly prohibited.
  • Geographical Limits: Taking the vehicle outside Kerala requires prior permission from the rental company.

1. Usage

  • Personal Use Only: The vehicle rented must only be used for personal purposes, meaning no commercial use, such as using the vehicle for delivery services, ride-sharing, or any business activities.

2. Prohibited Activities

  • Subleasing the Vehicle: Renters are not allowed to lend or rent the vehicle to other individuals or companies during the rental period.
  • Motor Sports: Participation in any form of motor racing, off-roading, or events involving competitive driving is not permitted.
  • Alcohol/Drugs: Using the vehicle under the influence of alcohol or drugs is strictly prohibited for safety and legal reasons.

3. Geographical Limits

  • State Boundary Restrictions: Renters are only permitted to drive the vehicle within Kerala unless explicit permission is obtained from the rental company to take it outside the state.

3. Payment Procedure

Payments are structured as follows:

  • Rental Charges: Calculated based on duration and vehicle type.
  • Security Deposit: Refundable deposit collected at the time of booking.
  • Payment Modes: Accepted through credit/debit cards, UPI, or net banking.

1. Rental Charges

  • Calculation Method:
    • The rental charges depend on two main factors: the duration of the rental and the type of vehicle chosen.
    • Example: If you rent a bike or a car, the rental rate may vary based on hours or days, and the vehicle category (e.g., standard, premium).
    • Duration:
      • Charges may be calculated hourly, daily, or weekly, depending on the rental terms you offer.
    • Vehicle Type:
      • Different vehicle categories may have different pricing structures.

2. Security Deposit

  • Amount:
    • A refundable security deposit is collected at the time of booking to cover potential damages or misuse.
    • The amount can vary based on the vehicle type and rental duration.
    • Example: Higher deposit for premium vehicles, lower deposit for standard ones.
  • Refund Process:
    • After the vehicle is returned in good condition, the deposit is refunded.
    • The refund may be processed through the same payment mode used for the booking.

3. Payment Modes

Payments can be made through:

  • Credit/Debit Cards:
    • Accepted via online payment gateways, allowing customers to pay through their cards.
  • UPI (Unified Payments Interface):
    • Customers can use UPI apps like Google Pay, PhonePe, Paytm, etc., to make direct payments.
  • Net Banking:
    • Customers can make payments using their bank’s net banking service through the provided payment gateway.

Payment Process Flow

  1. Choose Vehicle: Customer selects the type of vehicle they wish to rent.
  2. Enter Duration: Select the rental period (hours, days, etc.).
  3. Calculate Rent: The system calculates the total rental charges based on the selected vehicle and duration.
  4. Security Deposit: A refundable deposit is added to the total.
  5. Choose Payment Method: Customer selects a preferred payment method (credit card, UPI, net banking).
  6. Payment Confirmation: After payment is made, the booking is confirmed, and a receipt is generated.
  7. Refund of Security Deposit: Upon returning the vehicle in good condition, the security deposit is refunded using the same payment method used during booking.

4. Fuel Policy

Fuel-related terms include:

  • Fuel Level: Vehicles are provided with a full tank; renters must return them with a full tank.
  • Fuel Charges: If not returned with a full tank, fuel charges along with a service fee will be deducted from the security deposit.

1. Fuel Level

  • What it means: All vehicles provided for rent come with a full tank of fuel.
  • Action for renters: When you rent the vehicle, make sure to check the fuel level to confirm it’s full.

2. Fuel Charges

  • What happens if the fuel tank is not full: If the vehicle is returned without a full tank of fuel, fuel charges will be applied.
  • Additional charges: Along with the fuel charges, a service fee will also be added. This service fee covers the cost of refueling the vehicle, and possibly any administrative tasks related to handling the fuel issue.

3. Deductions from Security Deposit

  • Where the charges are deducted from: If you fail to return the vehicle with a full tank, the fuel charges (plus the service fee) will be deducted from the security deposit you paid at the time of renting.
  • Amount to be deducted: The specific amount deducted will be the cost of refueling the vehicle to full, plus the additional service fee, which should be communicated to you beforehand.

4. Avoiding Fuel Charges

  • What renters need to do: To avoid these charges, ensure that you return the vehicle with the same amount of fuel as it had when you first received it (a full tank).
  • Best practice: Refuel the vehicle yourself before returning it, or plan to do so as close to the rental return time as possible.

5. Important Notes

  • Always check the fuel level before driving away.
  • Be aware of the terms in your rental agreement regarding fuel policies, as there could be minor variations depending on the rental service.

5. Taxes and Additional Charges

Additional costs may include:

  • GST: Applicable as per government regulations.
  • Interstate Taxes: Renters are responsible for any taxes if the vehicle is taken out of Kerala.
  • Parking and Toll Charges: To be borne by the renter during the rental period

1. GST (Goods and Services Tax)

  • What it is: GST is a consumption tax applied on services or goods as per government regulations.
  • How it applies: GST is applicable on the rental amount and added to the total cost.
  • Action: Ensure to calculate and apply the GST at the current rate specified by the government.

2. Interstate Taxes

  • What it is: These are additional taxes that apply when the rented vehicle is taken out of Kerala into another state.
  • How it applies: Renters are responsible for paying the relevant taxes when the vehicle crosses state borders.
  • Action: Notify renters about the possibility of additional taxes if they plan to drive the vehicle interstate.

3. Parking and Toll Charges

  • What it is: Parking fees and toll charges are extra expenses incurred during the rental period for using parking facilities or passing through toll gates.
  • How it applies: The renter is responsible for paying any parking or toll charges while the vehicle is rented.
  • Action: Renters should be reminded to keep receipts for parking and toll payments as part of their responsibilities.

6. Inclusions and Exclusions

The rental agreement typically includes:

  • Inclusions:
    • One helmet for bike rentals.
    • Basic insurance coverage.
    • 24/7 roadside assistance.
  • Exclusions:
    • Fuel costs.
    • Fines for traffic violations.
    • Additional accessories (e.g., GPS devices).

Inclusions:

  1. Helmet for Bike Rentals:
    • One standard helmet will be provided with the bike rental. This is mandatory for safety purposes.
  2. Basic Insurance Coverage:
    • Basic coverage is typically included, which may cover damages or accidents (check specific terms to know what is covered under basic insurance).
  3. 24/7 Roadside Assistance:
    • Assistance is available round the clock in case of mechanical breakdowns, flat tires, or other issues while on the road.

Exclusions:

  1. Fuel Costs:
    • Fuel charges are not included in the rental price. The renter is responsible for refueling the bike as needed.
  2. Fines for Traffic Violations:
    • Any fines or penalties for traffic violations (such as speeding, parking violations, etc.) incurred during the rental period are the renter’s responsibility.
  3. Additional Accessories:
    • Extra accessories, such as GPS devices, extra helmets, or any other items, are usually not included and will be charged separately if requested.

7. Renter’s Liability

Renters are liable for:

  • Damages: Any damage to the vehicle not covered by insurance.
  • Theft: Full liability in case of theft due to negligence.
  • Traffic Violations: All fines and penalties incurred during the rental period.

1. Damages:

  • Responsibility: Renters are responsible for any damage caused to the vehicle during the rental period, which is not covered by the insurance.
  • Examples: Scratches, dents, broken parts, or any damage caused through improper use.
  • Exceptions: If the renter has purchased additional coverage or the vehicle is covered under a comprehensive policy, the extent of liability may be limited.

2. Theft:

  • Responsibility: Renters are fully liable if the vehicle is stolen during the rental period, but only if it is due to negligence on their part.
  • Examples of Negligence: Leaving the keys in the ignition, leaving the vehicle unattended in high-risk areas, or not securing the vehicle properly.
  • Non-Negligence Cases: If the vehicle is stolen through no fault of the renter, they may not be fully liable, depending on the rental company’s insurance policy.

3. Traffic Violations:

  • Responsibility: Renters are fully responsible for all fines, penalties, and traffic violations incurred during the rental period.
  • Examples: Speeding tickets, parking violations, running red lights, or other traffic-related offenses.
  • Payment: The renter must pay these fines or penalties, and the rental company may charge the renter if they are not paid directly.
  • Handling Violations: The rental company may pass on the fines, and if necessary, the company might charge an administrative fee for handling the violations.

8. Vehicle Maintenance and Repairs

Maintenance responsibilities include:

  • Routine Maintenance: Handled by the rental company.
  • Repairs: Renters must report any issues immediately; unauthorized repairs are not permitted.

1. Routine Maintenance:

  • Responsibility: Handled by the rental company.
  • Details:
    • The rental company is responsible for regular checks, such as oil changes, tire rotations, brake inspections, and fluid levels.
    • Scheduled maintenance, as per manufacturer guidelines, must be followed to keep the vehicle in optimal condition.
    • The company ensures that vehicles are clean and well-maintained before renting them out.

2. Repairs:

  • Responsibility: Renters must report any issues immediately.
  • Details:
    • Renters should notify the rental company about any mechanical or operational issues as soon as they arise.
    • An emergency contact number should be provided for renters to call if a problem occurs while the vehicle is in use.
    • If the vehicle breaks down, the rental company will arrange for repairs or replacement.

3. Unauthorized Repairs:

  • Responsibility: Unauthorized repairs are not permitted.
  • Details:
    • Renters are not allowed to attempt repairs or modifications to the vehicle themselves.
    • If a renter performs unauthorized repairs, they may be charged for any damages or additional costs caused.
    • Only authorized service centers or repair shops should handle the repairs, arranged through the rental company.

4. Accident or Damage Reporting:

  • Responsibility: Renters must report accidents and damages.
  • Details:
    • Renters are required to report accidents or any damage to the vehicle immediately.
    • Documentation, such as photos or a police report (if applicable), should be submitted to the rental company for review.
    • Depending on the situation, the renter may be liable for repairs or damages.

5. Inspection Process:

  • Responsibility: Both rental company and renter.
  • Details:
    • Before renting out the vehicle, an inspection should be conducted to record the vehicle’s condition.
    • Renters should inspect the vehicle upon receiving it and report any pre-existing damages.
    • After the rental period ends, a final inspection should occur to check for damages or issues caused during the rental.

9. Return Policy

Upon returning the vehicle:

  • Inspection: A thorough check for damages and fuel levels will be conducted.
  • Late Returns: May incur additional charges as per the rental agreement.

1. Vehicle Return Process

  • Return Timing: Ensure the vehicle is returned at the agreed-upon time. Late returns may result in extra charges based on the rental agreement.

2. Inspection of the Vehicle

  • Damage Check: A thorough inspection will be carried out by the rental service to identify any damages to the vehicle, including both exterior and interior.
  • Fuel Level Check: The fuel level will be checked. If the fuel level is lower than what it was at the time of rental, additional charges may apply.
  • Cleanliness Check: The vehicle should be returned in a clean condition. Charges may apply if the vehicle requires excessive cleaning.

3. Late Returns

  • Grace Period: There may be a small grace period (e.g., 30 minutes) for returns, after which late fees may be imposed.
  • Additional Charges: If the vehicle is returned later than the agreed return time, additional charges will be incurred as per the rental agreement.

4. Damage Charges

  • Minor Damages: If any minor damage is found (e.g., scratches), the renter will be charged for repairs.
  • Major Damages: For major damages, the cost of repairs will be higher, and the renter may be liable for the full cost of the damage repair.

5. Security Deposit

  • Refund of Deposit: The security deposit will be refunded upon a successful inspection with no damages or missing items. If any issues are found, the amount will be adjusted according to the damage/charges.

6. Finalizing the Return

  • Return Confirmation: Once the inspection is completed, both parties (the renter and rental service) will confirm the vehicle’s condition and any additional charges if applicable.
  • Receipt/Invoice: A final receipt or invoice will be provided to the renter for any charges incurred, including the return condition and fees.

10. GST Rates for Vehicle Rental Services

As per the latest guidelines:

  • GST Rate: Applicable rates are subject to government regulations and may vary.

1. GST Overview for Vehicle Rental Services

The GST (Goods and Services Tax) rate for vehicle rental services depends on the type of rental service and its usage (whether for business or personal use). GST is applicable on services like renting of cars, buses, motorcycles, etc., for both passenger transport and commercial usage.

2. GST Rates for Different Types of Vehicle Rental Services

a. Rental of Motor Vehicles for Personal Use

  • GST Rate: 18%
  • This applies to the renting of motor vehicles (such as cars, bikes, etc.) that are used for personal purposes.

b. Rental of Motor Vehicles for Business/Commercial Use

  • GST Rate: 18%
  • Renting motor vehicles for business or commercial purposes, such as renting for employees, clients, or for a transport service, also falls under this category.

c. Rental of Buses for Passenger Transport

  • GST Rate: 5%
  • This applies to the rental of buses used for transporting passengers.

d. Renting of Motor Vehicles for Specific Services (e.g., Luxury or Specialized Vehicles)

  • GST Rate: 28%
  • High-end or luxury vehicles such as SUVs or other specialized vehicles might be subject to this rate, depending on the specific service.

3. GST on Additional Charges

Any additional charges for services, such as fuel, driver allowance, etc., may also attract GST. These charges are generally taxed at the same rate as the vehicle rental service itself.

4. GST Input Tax Credit (ITC)

If you’re in the business of renting vehicles and are registered under GST, you may be eligible to claim an Input Tax Credit (ITC) for the GST paid on your vehicle purchases, maintenance, and other related expenses. This means you can offset the tax you’ve paid on expenses related to the rental service against the tax you collect from customers.

5. GST Returns

If you’re a GST-registered business providing vehicle rental services, you need to file GST returns. This includes:

  • GSTR-1 (for outward supplies)
  • GSTR-3B (for summary of returns)
  • GSTR-9 (Annual return)

6. GST on Vehicle Rental Contracts

It’s important to clearly mention the applicable GST rate on rental contracts to avoid disputes. The rate will depend on the vehicle type and its usage, as stated above.

7. Special Exemptions (if any)

The government may occasionally introduce exemptions or reductions for specific categories of services under the GST regime, so it’s important to stay updated with the latest notifications from the GST Council or consult a tax professional.

8. GST Compliance for International Rentals

If you are offering vehicle rental services to foreign nationals or international tourists, the GST rate may differ based on whether the service is considered an export. Export services may be subject to a zero-rated GST, meaning no tax is applied.

9. Documentation and Invoicing

You must issue GST-compliant invoices to your customers. The invoice should clearly mention:

  • GSTIN (Goods and Services Tax Identification Number)
  • HSN (Harmonized System of Nomenclature) code for the vehicle rental service
  • GST rates applied
  • Breakup of the rental cost and taxes

10. GST on Cancellations

If a rental service booking is canceled, the GST on the amount refunded may also need to be adjusted, either by issuing a credit note or by adjusting the tax liability in the GST returns.

11. Agreement and Documentation

The rental process involves:

  • Rental Agreement: A legally binding document outlining all terms and conditions.
  • Required Documents: Submission of valid ID proof, address proof, and driving license.

1. Rental Agreement:

  • Overview: This is a formal, legally binding document that defines all terms and conditions of the rental. It protects both the renter and the rental service provider.
  • Details Covered in the Agreement:
    • Rental Duration: The start and end date of the rental period.
    • Rental Rate: The cost for renting the vehicle, including any deposits or extra charges.
    • Terms of Usage: This includes usage restrictions like geographical limits, fuel policies, and maintenance responsibilities.
    • Insurance Coverage: The details of the insurance provided and any extra insurance the renter might want to purchase.
    • Damage and Repair: Responsibilities of the renter for damages, repairs, and maintenance during the rental period.
    • Return of Vehicle: Conditions for returning the vehicle, including the condition it should be returned in (fuel level, cleanliness, etc.).
    • Late Return Policy: Penalties or fees for late returns.
    • Cancellation Policy: Terms for cancellation of the rental agreement before the rental period begins.

2. Required Documents:

  • ID Proof:
    • Valid Government ID: This can include your passport, Aadhar card, voter ID, or any government-issued identification.
    • Purpose: The rental service requires ID proof to verify your identity.
  • Address Proof:
    • Documents Accepted: Utility bills (electricity, water, etc.), rental agreement, or bank statements.
    • Purpose: To confirm your residential address for communication and verification purposes.
  • Driving License:
    • Validity Check: The license must be valid and not expired.
    • Categories: Ensure the license covers the type of vehicle being rented (bike, car, etc.).
    • International License (if applicable): For foreign nationals or tourists renting, a valid international driving permit might be required.
    • Purpose: Ensures that the renter is legally permitted to drive the vehicle.

3. Signing the Agreement:

  • Review: Carefully review the terms and conditions of the rental agreement. Ask for clarification on any terms you don’t understand.
  • Signature: Both the renter and the rental service provider will sign the agreement to make it legally binding.
  • Receipt of Agreement Copy: After signing, the renter should receive a copy of the agreement for their records.

4. Vehicle Handover:

  • Condition Check: Inspect the vehicle before receiving it. Note any existing damages or issues, and ensure they are documented in the agreement.
  • Deposits: If applicable, the rental service will take a refundable deposit to cover potential damages or fines.

5. Return of Vehicle:

  • Condition Check on Return: When returning the vehicle, ensure it is in the same condition as when it was handed over (clean, full of fuel, undamaged).
  • Final Inspection: The rental service will inspect the vehicle to confirm it is in good condition before refunding any deposits.

12. Exclusions

Not covered under standard rental agreements:

  • Personal Accident Insurance: Renters are advised to have their own coverage.
  • Loss of Personal Belongings: The rental company is not responsible for any personal items lost during the rental period.

1. Personal Accident Insurance

  • Exclusion: The standard rental agreement does not include personal accident insurance.
  • Advice: Renters are advised to arrange their own personal accident insurance for coverage during the rental period.
  • Recommendation: Ensure you have adequate insurance to protect yourself in case of accidents or injuries while renting the vehicle.

2. Loss of Personal Belongings

  • Exclusion: The rental company is not responsible for any personal items that are lost, damaged, or stolen during the rental period.
  • Advice: Renters should take care of their personal belongings and avoid leaving valuables in the vehicle.
  • Recommendation: It is advisable to keep your personal items secure or insured, as the rental company will not cover the loss.

13. Additional Considerations

Renters should also be aware of:

  • Cancellation Policy: Fees may apply for cancellations made less than 24 hours before the scheduled pickup.
  • Extension of Rental Period: Subject to vehicle availability and must be communicated in advance.

1. Cancellation Policy

  • Step 1: Renters should be aware of the cancellation policy in advance.
  • Step 2: If the rental is canceled less than 24 hours before the scheduled pickup time, cancellation fees may apply.
  • Step 3: Fees and conditions related to cancellations should be clearly stated at the time of booking.

2. Extension of Rental Period

  • Step 1: Renters should know that the extension of the rental period is subject to vehicle availability.
  • Step 2: Renters need to inform the service provider in advance if they plan to extend the rental period.
  • Step 3: The service provider will confirm if the vehicle is available for an extension.
  • Step 4: If available, the renter will need to agree to any additional charges or terms for the extended rental period.