Before You Start
Settle four questions before you look at a single vehicle. First, how many passengers will you actually carry, excluding the driver — the answer decides whether you need a motorcab or a maxicab, and there is no benefit in buying capacity you will not use because tax and permit fees rise with it. Second, how will you be paid: one contract with one customer for the whole vehicle, or separate fares from individual passengers? That answer decides contract carriage versus stage carriage. Third, what geography do you need — a permit issued in one state does not automatically let you operate everywhere. Fourth, who will drive, and do they already hold a transport endorsement and badge, because the vehicle being legal is only half the requirement.
1. Know Which Class the Vehicle Is In
The Motor Vehicles Act 1988 draws its lines on passenger capacity excluding the driver. Get the class right and the rest of the compliance stack follows logically. Get it wrong and every subsequent step is built on a mistake.
| Class | Passenger capacity (excluding driver) | Typical use | Notes |
|---|---|---|---|
| Motorcab | Not more than 6 | City taxi, app cab, small airport transfer | Public service vehicle; lowest permit and tax band of the three |
| Maxicab | More than 6, not more than 12 | Staff shuttle, school run, tourist van, shared airport transfer | Public service vehicle; higher tax, fee and insurance band |
| Bus | More than 12 | Route bus, large staff transport, tour coach | Falls outside motorcab and maxicab; heavier compliance again |
Note what this table does not say. It says nothing about the badge on the bonnet or how many rows of seats the seller has bolted in. The class is a legal category recorded against the vehicle, and the number that matters is the seating capacity endorsed on the registration certificate.
This is where a great many used-van purchases go wrong. A seller with a seven-seater registered as a six-passenger vehicle may add a row to widen the buyer pool. A seller with a twelve-seater may pull a row out to make the vehicle look like a cheaper class. Neither change is legal without the registering authority endorsing it, and neither survives a fitness inspection.
2. Contract Carriage or Stage Carriage — How You Get Paid
This distinction confuses more first-time operators than any other, and it is genuinely simple once stated. It is about how money changes hands.
Contract carriage. The vehicle is engaged under a contract for its use as a whole, at a fixed or agreed rate, either on a time basis or from one point to another, without picking up or setting down passengers who are not part of that contract during the journey. One customer hires the whole vehicle. A company hiring a van to move its staff on an agreed route is a contract carriage arrangement. Contract carriage permits are granted under Section 74 of the Act.
Stage carriage. The vehicle carries more than six passengers for hire at separate fares paid by individual passengers. Anybody can board and pay their own fare. This is what a route bus does, and what a shared vehicle picking up individual paying passengers along a fixed route does.
Warning: The same physical van can be either one, and the operator decides which by how they charge. If you buy a vehicle with a contract carriage permit and then start collecting individual fares from passengers who board along the way, you are running a stage carriage operation on a contract carriage permit. That is a permit-condition breach, not a technicality, and it exposes you to penalties and to a disputed insurance claim.
So before you buy, be honest about your intended revenue model, then confirm the permit class on the vehicle matches it. A cheap vehicle with the wrong permit class is not cheap.
3. Match the Seating Capacity on the Record to the Seats in the Van
Open the registration certificate, find the seating capacity, and then count the seats actually fitted. If those two numbers differ, stop and find out why before any money moves.
An unendorsed seating change causes problems in at least four places. The vehicle fails fitness inspection, because the inspector checks the vehicle against its registered particulars. The permit is at risk, because permits are granted against a specified capacity. An insurance claim can be disputed, because the vehicle in the accident was not the vehicle described in the policy. And when you come to sell, the next buyer runs the same check and finds the same problem, so the discount you accepted on purchase does not come back to you.
The registered particulars, including seating capacity, appear in the VAHAN record. Pull it yourself rather than relying on a photograph of a certificate, because a photograph shows what the seller wants you to see and a record check shows what the government holds. The same lookup also returns registration status, the owner count, insurance validity and whether a hypothecation entry is still live. Our guide to reading GVW and axle load on a commercial RC covers the equivalent numbers on the goods side.
4. Fitness Certificate, Permit Validity and Dues
A commercial passenger vehicle carries several independent compliance clocks, and buyers frequently check one and assume the rest follow. They do not.
The fitness certificate is issued by the RTO after a physical inspection and must be current for the vehicle to operate. Commercial passenger vehicles are inspected considerably more often than private cars. The inspection covers brakes, steering, tyres, lights, emissions, seat belts, the safety equipment required for the class, and the electronic compliance items described below.
The permit has its own validity and its own renewal cycle, and it lapses independently of fitness. A vehicle can hold a current fitness certificate and a lapsed permit, or the reverse.
Then there are dues: road tax for the commercial class, any green tax applicable to older commercial vehicles in that state, and outstanding challans. Unpaid dues follow the vehicle rather than the previous operator, and they surface at exactly the wrong moment — when you try to transfer or renew. We have written separately about how unpaid toll now blocks NOC and fitness, which is the same trap in a different guise.
5. AIS-140 GPS and Panic Button
AIS-140 is the Indian standard covering GPS-based vehicle tracking and an emergency panic button in commercial passenger vehicles. It became applicable to new registrations from 1 January 2019, with phased retrofit deadlines for vehicles already on the road.
What matters to a buyer today is practical rather than historical: a public service vehicle presented for fitness or permit renewal without a functional device and a working panic button will not clear the process. So a vehicle being sold with a lapsed or missing device is being sold with a bill attached, and the seller knows the size of it even if you do not.
Check three things. Is a device physically fitted. Does it power up and is it actually transmitting, rather than an inert box screwed to the dashboard for inspection day. And is the panic button reachable by a passenger and wired in, rather than glued on. If the seller cannot demonstrate the device working, price the replacement into your offer. Our guide to speed governor and VLTD rules for used commercial vehicles goes into the equivalent checks on the goods-carrier side.
Check the registered particulars before you commit
Registered seating capacity, vehicle class, registration status, owner count, insurance validity, hypothecation and challan flags — pulled from the VAHAN database in about the time it takes to read a listing.
6. Permit Transfer Is a Separate Transaction
This is the assumption that costs buyers the most money, because it is discovered after payment rather than before.
A registration certificate transfers to you through the standard RC transfer process. A permit does not travel with the vehicle automatically. A permit is granted to an operator, subject to conditions, by a particular transport authority. Transferring it requires the permission of that authority, generally on a joint application from the outgoing and incoming holder, with fees payable and dues cleared first.
That means a seller saying "the permit comes with it" is describing an intention, not a completed fact. Before you agree a price, establish which authority issued the permit, whether it is currently valid, whether tax and dues against the vehicle are clear, what the transfer process and fee will be in that state, and whether there is any reason the authority would refuse. If a permit will not transfer, you have bought a van and will have to obtain a permit yourself, which may be straightforward or may be impossible depending on whether that state or city currently issues new permits of that class.
Warning: Some cities periodically cap or suspend fresh permits in particular categories. In those places, an existing transferable permit is a substantial part of the vehicle's value, and a permit that turns out not to be transferable can leave you holding an asset that cannot do the job you bought it for. Confirm with the issuing authority, not with the seller.
7. Driver Requirements Are Separate From Vehicle Requirements
Carrying passengers for hire or reward requires the driver to hold a licence with a transport endorsement, not an ordinary private licence, and in most states an additional badge issued by the RTO for commercial passenger driving. These are obtained by the driver from the RTO, not issued by any platform or employer.
If you are buying a vehicle to be driven by somebody else, confirm before purchase that your intended driver already holds these or can obtain them, because the qualifying requirements typically include a minimum period of driving experience, police verification and a medical fitness certificate. A vehicle standing idle while a driver works through a badge process is an expensive way to learn this. Our guide to the transport endorsement on a commercial driving licence sets out what is involved.
Common Mistakes Indian Buyers Make
Avoid these mistakes: each one is common, and each one is discovered after payment rather than before.
- Counting the seats instead of reading the RC — the registered seating capacity is the number that governs
- Assuming the permit transfers with the vehicle — it needs the issuing authority's permission
- Buying maxicab capacity for a motorcab job — you pay the higher tax and fee band for empty seats
- Planning individual fares on a contract carriage permit — that is a stage carriage operation
- Checking insurance validity and assuming fitness and permit match it — three independent clocks
- Accepting a photographed certificate instead of a record check — a photo shows what the seller chose to show
- Ignoring a non-functional AIS-140 device — it will fail the next fitness or permit renewal
- Leaving road tax and green tax arrears unchecked — dues follow the vehicle, not the previous operator
- Buying a privately registered van intending to run it commercially — Section 66 requires a permit
- Forgetting the driver's transport endorsement and badge — the vehicle is only half the compliance
- Not confirming whether the city currently issues fresh permits of that class — it changes the value of the one attached
Real Indian Example: A Twelve-Seater That Could Only Legally Carry Nine
Sunita, 41, runs a small employee-transport operation in Pune with two vehicles and wanted a third. She found a well-maintained twelve-seater van, one owner, complete service history, at a price roughly ₹1.4 Lakh below comparable listings. The seller explained the discount as a quick-sale requirement, which is common enough to be believable.
She was ready to pay a deposit and ran a record check first, mostly as a formality. The registered seating capacity came back as nine, not twelve. The previous operator had added a rear row at some point and never had the change endorsed by the registering authority.
That single field changed the whole transaction. The vehicle could legally carry nine passengers, not twelve, so it did not fit the contract she had bought it for. Regularising the extra row meant approaching the registering authority for an endorsement, with no certainty of approval and a reclassification of tax and permit if granted. Until then, the vehicle would fail fitness inspection with the row fitted, and an insurance claim during an incident with twelve passengers aboard would have been open to dispute.
| What she thought she was buying | What the record showed | Consequence |
|---|---|---|
| Twelve-seat maxicab | Nine-seat registered capacity | Wrong vehicle for the contract |
| Discount for a quick sale | Discount for an unendorsed modification | The saving was the problem, priced in |
| Fitness due in four months | Would fail with the extra row fitted | Remedial work before it could operate |
| Permit "comes with the van" | Transfer needs the issuing authority | A separate application, fee and outcome |
Sunita walked away and bought a genuine ten-seater three weeks later at close to full asking price, with the registered capacity matching the seats fitted. The record check that saved her cost ₹49. The lesson is not that the seller was necessarily dishonest — an unendorsed row added years earlier by a previous operator may simply have been forgotten. The lesson is that the record does not forget, and the record is what the inspector, the permit authority and the insurer will read.
Final Thoughts
A used passenger van is not really a vehicle purchase. It is the purchase of a permission to earn, and the vehicle happens to be attached to it. That is why the checks that matter most are documentary rather than mechanical. Engine condition can be assessed on a test drive and repaired if it disappoints. A seating capacity that does not match, a permit that will not transfer, or a class that does not fit the work cannot be fixed with a spanner.
Run the sequence in order and the process is straightforward. Decide your passenger count and revenue model first. Confirm the class and the registered seating capacity from the record, not the vehicle. Establish the four dates — fitness, permit, tax and insurance — independently. Verify the AIS-140 device actually works. Treat the permit transfer as its own transaction with its own approval risk. Confirm your driver's endorsement and badge. Only then negotiate on condition and price.
Related reading: yellow board taxi permit rules, used school van permit and fitness checks, and yellow plate permit renewal. For anything specific to your state, the issuing transport authority is the only source that binds.
Frequently Asked Questions
Both are defined in Section 2 of the Motor Vehicles Act 1988 and the difference is purely seating capacity. A motorcab is a vehicle constructed or adapted to carry not more than six passengers excluding the driver, for hire or reward. A maxicab carries more than six but not more than twelve passengers excluding the driver, for hire or reward. Anything above twelve passengers falls outside both and is treated as a bus. The classification decides the permit class, the fee band, the driver licence class and the insurance category, so it is not a cosmetic label.
It is about how fares are collected, not about the vehicle. A contract carriage is engaged under a contract for the use of the vehicle as a whole, at a fixed or agreed rate, either on a time basis or from one point to another, without picking up or setting down passengers who are not part of that contract during the journey. A stage carriage carries more than six passengers for hire at separate fares paid by individual passengers. A staff van running an agreed office route for one employer is a contract carriage. Charging each person who boards a separate fare turns the same vehicle into a stage carriage operation, which needs a different permit.
The seating capacity is endorsed on the registration certificate and appears in the VAHAN record. Check that number against the seats physically fitted in the vehicle. Sellers sometimes add a row of seats to make a vehicle look more useful, or remove one to make it look like a lower-tax class. Either way, if the seats in the vehicle do not match the seating capacity on the record, the vehicle fails fitness inspection, the permit is at risk and an insurance claim can be disputed. An RC check on VahanBazaar costs Rs 49 and returns the registered particulars.
Not automatically. The registration transfers through the usual RC transfer process, but a permit is granted to an operator and its transfer needs the permission of the transport authority that issued it, usually with an application from both the outgoing and incoming holder plus fees and clearance of dues. Treat the permit as a separate transaction from the vehicle. Ask which authority issued it, whether it is current, whether dues and tax are clear, and confirm what the transfer process and cost will be before you agree a price.
AIS-140 is the Indian standard for GPS tracking and an emergency panic button in commercial passenger vehicles, and it applies to public service vehicles including maxicabs. It became applicable to new registrations from 1 January 2019, with phased retrofit deadlines for older vehicles. In practice, a vehicle presented for fitness or permit renewal without a functional device and panic button will not clear the process. Check that the device is present, working and not merely a dummy fitted for inspection day.
No. Section 66 of the Motor Vehicles Act 1988 requires a permit for a transport vehicle used to carry passengers for hire or reward. A privately registered vehicle used commercially is operating without the required permit, which exposes the operator to penalties and vehicle detention, and it can also give the insurer grounds to dispute a claim arising during that use. If the intended use is commercial, the vehicle must be registered and permitted for it.
Check the Record Before You Pay a Deposit
An Rs 49 RC check returns registered particulars, registration status, owner count, insurance validity, hypothecation and challan flags straight from the VAHAN database.