Rental without rider follows the vehicle's rate
The services rate notification taxes leasing or rental without operator at the rate applicable to supply of like goods involving transfer of title, and the 56th Council moved rentals of goods attracting 40% to 40%. For a bike rental fleet this means scooters and motorcycles up to 350 cc rent at 18%, bikes above 350 cc rent at 40%, and electric scooters rent at 5%, since the sale of each would attract that rate. Tourist destinations with premium touring bikes need careful line-wise rates.
Accessories rented with the bike
A helmet rented along with a scooter is part of a single booking. When it is priced separately, it can be treated as a separate rental of a helmet, which takes the helmet's own rate. When the helmet is provided free with the bike, it is part of the bike rental. For premium bikes at 40%, it is worth separating accessory charges, as their rate may be lower.
Deposits, fines and damage
Refundable deposits are not consideration while held. Amounts kept for damage, missing helmets or late return become consideration for the rental and should be taxed at the rate of the bike rented, ideally on a separate invoice or debit note. Traffic fines paid for the rider and recovered at cost can be treated as reimbursements, but a processing fee kept by the business is taxable.
Subscription and long-term leases
Monthly and yearly bike subscriptions for office commuters and delivery riders are still rentals without operator. Where the subscription includes servicing and insurance in a single fee, that is a single rental supply. Electric scooter subscriptions for delivery riders at 5% have become common; keep EV and petrol subscriptions in separate plans so the rates are not mixed.
Tourist season pricing and advance bookings
Bike rentals in hill stations and beach towns charge higher rates in peak season and take advance payments online. Tax is due when the advance is received, at the rate of the bike booked. If the rider later switches from a scooter to a 400 cc motorcycle, the rate changes, so the final invoice must adjust both value and rate, with a credit note or fresh invoice against the advance receipt. Keeping the booked model on the receipt voucher makes the adjustment easy to explain.
Inter-state rides and rental permits
Riders often take rented bikes across state borders. Rental bikes in many states must carry a rent-a-motorcycle permit and commercial registration, and the transport department may require the operator to keep rider records. For GST, the place of supply for rental of a vehicle without operator is generally the location of the recipient, which for walk-in tourists is usually the rental location. The invoice should show the business's GSTIN for the state where the bike is handed over.