Car Rental Service in Accordance with MVD Compliance

 

Starting and operating a car rental service in India requires strict adherence to Motor Vehicles Department (MVD) regulations. Below are the key MVD compliance requirements for legally running a rental service:

1. Vehicle Registration & Permit

·         Commercial Registration:

Ø  All rental vehicles must be registered as commercial vehicles (yellow plate).

Ø  Private vehicles (white plate) cannot be used for rental services.

·         Permit Type Based on Service:

Ø  Self-Drive Car Rental: Requires a self-drive permit issued by the RTO.

Ø  Chauffeur-Driven Rental: Requires a contract carriage permit for intra-city/intercity travel.

Ø  All India Tourist Permit (AITP): Needed for operating rental cars across multiple states.

2. Insurance & Safety Compliance

·         Mandatory Commercial Vehicle Insurance: Covers third-party liabilities and passengers.

·         Passenger Safety Regulations:

Ø  GPS tracking devices must be installed in rental cars.

Ø  Vehicles should have first aid kits and speed governors as per MVD guidelines.

Ø  Fire extinguishers are required in commercial rental vehicles.

3. Driver & User Regulations (For Chauffeur-Driven Rentals)

·         Driver Requirements:

Ø  Must possess a valid commercial driving license (LMV-T or equivalent).

Ø  Drivers must follow MVD-mandated working hours to avoid fatigue.

·         Self-Drive Rentals:

Ø  Renters must submit a valid driving license (LMV/MCWG) and identity proof.

Ø  Some states require renters to be at least 21 or 25 years old.

4. Tax & Compliance

·         Goods and Services Tax (GST):

Ø  5% GST for cab aggregators (like Uber, Ola).

Ø  18% GST for self-drive car rentals.

·         State Road Tax & Tourist Tax: Applicable for interstate rentals.

·         Regular Fitness Checks:

Ø  Rental cars must undergo periodic fitness tests at the RTO.

5. Digital Compliance & Documentation

·         Maintain records of rental agreements, driver details, and user KYC as per MVD norms.

·         Vehicles must be linked to VAHAN & SARATHI (government vehicle registration databases).

·         If providing app-based rental services, compliance with aggregator guidelines under MVD rules is required.

Penalties for Non-Compliance

Failing to comply with MVD regulations can result in:

·         Heavy fines for unauthorized rentals.

·         Vehicle seizure for using a private (white plate) vehicle for rentals.

·         License suspension for repeat offenses.

Conclusion

To legally run a car rental service, you must follow MVD rules for vehicle registration, insurance, taxation, and safety. Whether you’re starting a self-drive rental or a chauffeur-driven service, compliance is essential to avoid penalties.