Bike and Car Renting Laws in Tamil Nadu

Tamil Nadu’s bike and car rental industries are governed by a combination of national regulations and state-specific guidelines. While the state has seen recent developments, such as the temporary ban and subsequent revocation of bike taxis in December 2024

comprehensive, updated state-specific laws for bike and car rentals are still evolving. Therefore, rental businesses and users should adhere to existing national regulations and any pertinent state guidelines.

1. Policy Overview

• Vehicle Registration: All rental vehicles must be registered as commercial vehicles, displaying yellow number plates as mandated by the Motor Vehicles Act. Renting out privately registered vehicles for commercial purposes is prohibited.
• Driver Regulations: Drivers of rental vehicles should not operate continuously for more than 8 hours per day or 48 hours per week to ensure safety.

1. Vehicle Registration

• Step 1: All vehicles offered for rent must be registered as commercial vehicles.
• Step 2: The vehicle must display yellow number plates, which are a legal requirement under the Motor Vehicles Act.
• Step 3: Renting out privately registered vehicles for commercial purposes is strictly prohibited.
• Step 4: Ensure all vehicles are compliant with the necessary commercial vehicle regulations before offering them for rent.

2. Driver Regulations

• Step 1: Ensure that drivers operate the vehicles in a safe manner and are not overworked.
• Step 2: Limit the working hours of drivers:
  • Drivers must not operate the vehicle for more than 8 hours per day.
  • The total driving hours for a driver should not exceed 48 hours per week.
• Step 3: Monitor driver schedules to ensure that the regulations on working hours are strictly followed to maintain safety.
• Step 4: Maintain records of drivers’ working hours to ensure compliance.

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2. Terms and Conditions

• Eligibility: Renters must possess a valid driving license appropriate for the vehicle category. International renters should have an International Driving Permit (IDP) along with their home country license.
• Documents Required:
  • Valid driving license
  • Government-issued photo ID (e.g., Aadhaar card, passport)
  • Proof of address
  • For international customers: passport and visa copies

1. Eligibility:

• Renters Must Have a Valid Driving License:
  • Renters are required to possess a valid driving license that corresponds to the category of the vehicle they intend to rent (e.g., car, bike, etc.).
  • Ensure that the license is legally valid and not expired.
• International Renters:
  • International renters must hold an International Driving Permit (IDP) along with their home country driving license.
  • The IDP is recognized globally and is required for foreign nationals to drive in India.

2. Documents Required:

Renters must present the following documents to complete the rental process:

• Valid Driving License:
  • This license must be valid and appropriate for the type of vehicle being rented.
  • If a renter is from India, they must have a domestic driving license.
  • For international customers, the IDP is required along with the home country’s driving license.
• Government-Issued Photo ID:
  • A photo ID issued by a recognized government authority is mandatory for identification purposes.
  • Acceptable photo IDs may include:
    • Aadhaar Card (for Indian nationals)
    • Passport (for both Indian nationals and international customers)
• Proof of Address:
  • Renters must provide proof of their current address to confirm their residency.
  • This can be one of the following:
    • Utility bill
    • Bank statement
    • Rental agreement
    • Other government-issued documents with address
• For International Customers:
  • In addition to the IDP and home country driving license, international customers must provide:
    • Passport – A valid passport as proof of identity.
    • Visa Copies – The visa must be valid for the duration of the stay in India.

3. Verification Process:

• The rental company will verify the authenticity of all documents.
• Any discrepancies or invalid documents may result in the refusal of the rental service.

4. Additional Terms:

• Renters must adhere to the local traffic laws and safety regulations while using the rental vehicle.
• Any damage to the vehicle, fines, or penalties incurred during the rental period will be the renter’s responsibility.

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3. Rental Agreement

• Inclusions:
  • Basic insurance coverage
  • One helmet for bike rentals (additional helmets may incur extra charges)
  • 24/7 roadside assistance
• Exclusions:
  • Fuel costs
  • Interstate taxes and permits
  • Parking and toll charges
  • Penalties for traffic violations

Rental Agreement:

Inclusions:

1. Basic Insurance Coverage:
   • All rentals come with basic insurance coverage, which protects you in case of an accident or damage to the vehicle during the rental period.
2. One Helmet for Bike Rentals:
   • For bike rentals, one helmet will be provided with the rental. Additional helmets may incur extra charges if you need more than one.
3. 24/7 Roadside Assistance:
   • Round-the-clock support is available in case of emergencies. This covers issues like vehicle breakdowns, tire changes, or other minor repairs.

Exclusions:

1. Fuel Costs:
   • The rental does not include the cost of fuel. You are responsible for refueling the vehicle before returning it.
2. Interstate Taxes and Permits:
   • If you drive the vehicle across state lines, any taxes or permits required will be your responsibility.
3. Parking and Toll Charges:
   • Any parking fees, toll charges, or similar costs incurred during your rental period will be paid by you.
4. Penalties for Traffic Violations:
   • If you are caught committing a traffic violation (such as speeding or parking violations), any fines or penalties will be your responsibility.

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4. Financial Aspects

• Payment Procedure: Renters are required to pay a security deposit along with the rental fee at the time of booking. Payments can typically be made via credit/debit cards, digital wallets, or net banking.
• GST Rates: Goods and Services Tax (GST) is applicable on vehicle rental services. The standard GST rate for car rental services is 18%.

1. Payment Procedure

• Step 1: Booking
  The renter makes a booking request through your platform.
• Step 2: Security Deposit
  Renters are required to pay a security deposit at the time of booking. This is typically an upfront amount that ensures the return of the vehicle in good condition.
• Step 3: Rental Fee Payment
  Along with the security deposit, renters need to pay the rental fee for the bike/car. This covers the cost of the vehicle’s use for the chosen rental period.
• Step 4: Payment Methods
  Payments can be made through several channels:
  • Credit/Debit Cards: Renters can use their cards to make payments securely.
  • Digital Wallets: You can offer services like Paytm, Google Pay, etc., for digital payments.
  • Net Banking: Renters can opt for direct bank transfers using their online banking services.
• Step 5: Confirmation
  Once the payment is received, the booking is confirmed, and renters will receive a booking confirmation along with details of the rented vehicle.

2. GST Rates

• Step 1: GST Applicability
  Goods and Services Tax (GST) is applicable to vehicle rental services.
• Step 2: GST Rate for Car Rentals
  The standard GST rate for car rental services is 18%.
  • This rate applies to the rental fee charged to the customer and will be added on top of the base rental amount.
  • The GST should be clearly mentioned on the invoice provided to the renter.
• Step 3: GST Rate for Bike Rentals
  The GST rate for bike rentals might vary, but typically it would also be in the 18% range, though confirmation from local authorities or tax professionals is advisable for precise details.

3. Additional Considerations

• Refunds: In case of any cancellations, you may have a refund policy, ensuring that the security deposit or partial rental fees are refunded according to your terms.
• Taxes on Security Deposit: Generally, GST is not applicable on the security deposit since it is refundable, but you should consult a tax expert to verify this.
• Invoices: After each transaction, ensure you provide a detailed invoice to the customer, including GST breakdowns, payment methods used, and rental period.

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5. Renter’s Liability

• Damage and Repairs: Renters are liable for any damage to the vehicle during the rental period. It’s advisable to inspect the vehicle before use and report any pre-existing damages to avoid disputes.
• Mechanical Failures: Routine maintenance is the responsibility of the rental company. However, if mechanical failures occur due to the renter’s negligence, repair costs may be charged to the renter.

1. Damage and Repairs

• Pre-Rental Inspection:
  • Before renting the vehicle, renters should inspect it thoroughly. Check for any visible damage such as scratches, dents, or broken parts.
  • Ensure to document the existing damage (photos or written notes) and report it to the rental company to avoid being held responsible later.
• Liability for Damages:
  • Renters are responsible for any damage that occurs during the rental period. This includes accidents, scratches, or any incidents that happen while using the vehicle.
  • If damage occurs, the renter may be required to pay for the repairs or cover the cost through the insurance policy (if applicable).
• Insurance Coverage:
  • Check if the rental agreement includes any coverage, such as Collision Damage Waiver (CDW) or theft protection.
  • If not, renters may need to purchase additional insurance to avoid high out-of-pocket expenses in case of damage.
• Returning the Vehicle:
  • When returning the vehicle, it should be in the same condition as when it was rented, minus normal wear and tear.
  • If the rental company finds new damage upon return, they will assess repair costs and may charge the renter accordingly.

2. Mechanical Failures

• Routine Maintenance:
  • Routine maintenance, like oil changes or tire replacements, is the responsibility of the rental company. These should be up to date before renting out the vehicle.
• Renter’s Responsibility:
  • Renters should take care to use the vehicle properly, avoiding negligence (e.g., running out of gas, ignoring warning lights, or mishandling the car).
• Negligence and Repair Costs:
  • If mechanical failures occur due to the renter’s negligence, such as ignoring warning lights or mishandling the vehicle, the rental company may charge the renter for the repair costs.
  • Examples of negligence include overheating the engine, damaging the brakes, or running the car without sufficient oil or coolant.
• Emergency Assistance:
  • In case of mechanical failure that is not caused by the renter’s negligence, renters should contact the rental company for assistance or to arrange a replacement vehicle.
  • For failures caused by renter’s negligence, the renter may be responsible for covering the costs of repairs and any associated charges.

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6. Additional Considerations

• Fuel Policy: Vehicles are typically provided with a full tank of fuel and should be returned with the same level. Any discrepancy may result in refueling charges.
• Interstate Travel: Traveling to other states requires payment of applicable state taxes and obtaining necessary permits. Renters should inform the rental company in advance if planning interstate travel.
• Vehicle Return: Vehicles should be returned at the agreed-upon time and location. Late returns may incur additional charges.

1. Fuel Policy:

• Vehicles are provided with a full tank of fuel at the time of rental.
• Renters are expected to return the vehicle with the same fuel level as when it was picked up.
• Discrepancy in fuel level may result in refueling charges.

2. Interstate Travel:

• If you plan to travel to other states, you must:
  1. Pay applicable state taxes for the states you will be traveling through.
  2. Obtain necessary permits for interstate travel.
• It is important to inform the rental company in advance if you plan to travel across state lines.

3. Vehicle Return:

• Vehicles should be returned on time and at the agreed-upon location.
• If the vehicle is returned late, there may be additional charges.

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7. Sample Fee Structure

Below is a sample fee structure for car rentals in Tamil Nadu:

Vehicle Type	Rate per Kilometer	Minimum Kilometers per Day	Driver Allowance per Day
Sedan (e.g., Dzire)	₹14	300 km	₹600
SUV (e.g., Innova)	₹18	300 km	₹700
Luxury SUV (e.g., Crysta)	₹20	300 km	₹700
Tempo Traveller (12-seater)	₹23	300 km	₹800

Note: Rates are indicative and may vary based on the rental company and specific terms.

Step 1: Vehicle Types

Define the different types of vehicles available for rent. Here are the vehicles included in this structure:

• Sedan (e.g., Dzire)
• SUV (e.g., Innova)
• Luxury SUV (e.g., Crysta)
• Tempo Traveller (12-seater)

Step 2: Rate per Kilometer

Specify the charge for each vehicle type based on the number of kilometers driven. The rates are as follows:

• Sedan (e.g., Dzire): ₹14 per kilometer
• SUV (e.g., Innova): ₹18 per kilometer
• Luxury SUV (e.g., Crysta): ₹20 per kilometer
• Tempo Traveller (12-seater): ₹23 per kilometer

Step 3: Minimum Kilometers per Day

State the minimum number of kilometers required to be driven each day. The minimum distance is fixed for each vehicle type:

• Sedan (e.g., Dzire): 300 kilometers per day
• SUV (e.g., Innova): 300 kilometers per day
• Luxury SUV (e.g., Crysta): 300 kilometers per day
• Tempo Traveller (12-seater): 300 kilometers per day

Step 4: Driver Allowance per Day

Add the daily driver allowance for each vehicle. This allowance covers the cost of the driver’s services:

• Sedan (e.g., Dzire): ₹600 per day
• SUV (e.g., Innova): ₹700 per day
• Luxury SUV (e.g., Crysta): ₹700 per day
• Tempo Traveller (12-seater): ₹800 per day

Step 5: Additional Notes

Include any additional notes regarding the rates:

• Rates are indicative: These rates are just examples and can vary based on the rental company or specific terms and conditions.

This structure gives clear information on the costs related to vehicle rental, the driver’s fee, and minimum usage requirements per day for each vehicle type.

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8. Insurance and Safety

• Insurance Coverage: Rental vehicles come with basic insurance. Renters may opt for additional coverage at extra cost.
• Safety Equipment: Providing helmets for bike rentals is mandatory. Reflective vests and other safety gear are recommended.

1. Insurance Coverage for Rental Vehicles

• Basic Coverage: All rental vehicles (bikes and cars) come with basic insurance that covers:
  • Damage to the vehicle in case of an accident
  • Theft or loss of the vehicle
• Additional Coverage Options: Renters have the option to purchase additional coverage for extra protection, including:
  • Collision Damage Waiver (CDW): Covers damage caused by accidents.
  • Theft Protection: Covers the cost if the vehicle is stolen.
  • Personal Accident Insurance (PAI): Covers injuries to the renter during the rental period.
• Cost of Additional Coverage: Additional coverage will incur an extra cost, which varies depending on the type and level of coverage selected.

2. Safety Equipment for Bike Rentals

• Mandatory Gear: Helmets must be provided to all renters to ensure safety.
  • Helmets are essential for protection during rides and are a legal requirement in most places.
• Recommended Gear: While not mandatory, it is highly recommended to provide:
  • Reflective Vests: To increase visibility, especially at night or in low-light conditions.
  • Gloves and Knee Pads: To provide extra safety, especially for longer rides or rides in rugged areas.
  • Protective Jackets: For added protection against abrasion in case of a fall.
• Rental Process: Ensure that renters are given the option to opt for these additional safety gear, which might incur a small rental charge.

3. Safety Guidelines

• Rider Safety Briefing: Renters should be given a briefing on safe riding practices, including:
  • Wearing the helmet at all times while riding.
  • Obeying traffic rules and local regulations.
  • Riding within speed limits and avoiding aggressive driving.
• Vehicle Condition Check: Before renting out the vehicle, the rental company should:
  • Inspect the vehicle for any existing damages and note them down.
  • Ensure that the bike or car is in a safe operating condition.
  • Provide renters with a checklist for checking vehicle conditions before returning.

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9. Compliance and Legalities

• Regulatory Compliance: Rental companies must adhere to the Motor Vehicles Act and any state-specific regulations. This includes ensuring all vehicles are commercially registered and meet safety standards.
• Business Registration: Operators should obtain necessary licenses, such as GST registration and shop establishment registration, to operate legally.

1. Understand Regulatory Compliance

• Motor Vehicles Act (MVA):
  • The MVA governs the use of motor vehicles in India, and rental vehicles must adhere to its provisions.
  • Ensure that your rental vehicles are commercially registered and carry a valid permit for commercial use.
  • Follow state-specific rules for commercial vehicle operations, as some states may have their own regulations.
• Commercial Vehicle Registration:
  • All vehicles in your fleet must be registered as commercial vehicles with the Road Transport Office (RTO).
  • Complete the registration process for each vehicle, providing documents such as proof of identity, address, and valid insurance.
• Vehicle Fitness:
  • Ensure that all vehicles are regularly inspected to meet safety standards.
  • Obtain a fitness certificate from the RTO after the inspection.
  • Ensure vehicles have valid pollution control certificates (PUC).
• Insurance:
  • Ensure that all vehicles are adequately insured for commercial purposes.
  • It’s recommended to have both third-party liability insurance and comprehensive insurance to cover damage and theft.

2. Obtain Necessary Business Licenses and Registrations

• GST Registration:
  • If your annual turnover exceeds the prescribed limit (currently ₹40 lakhs for service providers), you need to register for Goods and Services Tax (GST).
  • Obtain a GSTIN from the GST portal, which is essential for tax filing and invoicing customers.
  • Collect GST from your customers on rental charges and file monthly returns.
• Shop Establishment Registration:
  • Register your business under the Shops and Establishments Act applicable in your state.
  • This registration is mandatory for operating businesses that engage in commercial activities.
  • It ensures compliance with labor laws and ensures the business meets basic workplace standards.

3. Ensure Legal Compliance in Operations

• Rental Agreement:
  • Draft a comprehensive rental agreement outlining the terms and conditions of renting the vehicle.
  • Include clauses related to the duration of rental, security deposit, insurance coverage, maintenance, vehicle return, and penalties for damage or delay.
  • Ensure the agreement is signed by both the operator and the renter before handing over the vehicle.
• Driver Requirements:
  • Ensure all drivers of rental vehicles hold a valid driving license (commercial or private, as applicable).
  • Ensure drivers meet the age and experience requirements specified by the Motor Vehicles Act.
  • It’s a good practice to conduct background checks to ensure the driver is trustworthy.
• Data Protection:
  • Ensure the personal data of your customers is stored securely and in compliance with privacy laws.
  • Consider implementing an online system for customer bookings, payments, and feedback to streamline operations.

4. Comply with Other Local Regulations

• Traffic Rules:
  • Your rental business must educate customers on the importance of following traffic rules and safety regulations while using the vehicles.
  • Ensure that your rental agreement includes clauses that make the customer responsible for any traffic violations committed during the rental period.
• Local Permits (if applicable):
  • Depending on your location, there may be additional permits required, such as permits for operating in certain zones or tourist areas. Always check with local authorities.

5. Periodic Compliance and Auditing

• Tax and Financial Audits:
  • Ensure that your business complies with tax filing requirements, and your financial records are in order. Hire a certified accountant if necessary.
  • Regularly audit your financial statements and vehicle maintenance records to ensure compliance with legal and safety standards.

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10. Customer Responsibilities

• Adherence to Traffic Laws: Renters must comply with all traffic regulations. Any fines or penalties incurred during the rental period are the renter’s responsibility.
• Vehicle Care: Renters should handle the vehicle responsibly, ensuring it is used for lawful purposes and returned in good condition.

1. Adherence to Traffic Laws

• Compliance with Regulations: Renters must strictly follow all local, state, and national traffic laws during the rental period.
• Responsibility for Fines: Any traffic fines, penalties, or legal charges that occur during the rental period (such as speeding tickets or parking fines) will be the renter’s responsibility to settle.
• No Legal Violations: Renters should not engage in any activities that are unlawful while operating the rented vehicle.

2. Vehicle Care

• Responsible Usage: Renters are required to use the vehicle only for lawful activities and in a manner that is considerate of the vehicle’s condition.
• Safe Driving Practices: The renter must avoid reckless driving, including speeding, harsh braking, and unnecessary wear and tear.
• Returning in Good Condition: The vehicle should be returned in the same condition as it was at the start of the rental period, with no damage or excessive dirt.
• Fuel and Maintenance: Renters may be required to return the vehicle with the same level of fuel as when it was rented, and they should be mindful of routine maintenance needs such as oil levels and tire pressure.

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