Answer framed by Anina D'Cunha, Lawfarm Researcher:
State governments have different policies on the use of private vehicles for commercial passenger use. One has to get a permit issued for using a vehicle for commercial use.
For example, the Delhi Government Transport Department issues permits for Temporary Permits, All India Tourist Permit (AITP), Rent-a-Cab permits, etc.
Section 75 of the Motor Vehicles Act, 1988 deals with a scheme known as the Rent-a-cab Scheme for renting of motor cabs. The Scheme  provides an application for grant of license for renting motor cabs, along with conditions subject to which motor cabs may be rented, which must be complied with. The application is provided in the link to below.
The conditions include that the applicant has to have a good moral character and has intimate knowledge of passenger transport business, that the applicant should have necessary facilities for the housing, maintenance and repair of his vehicles, that the applicant has to have at least one telephone which is accessible throughout day and night, etc. among other conditions listed under Section 5 of the Rent-a-cab Scheme. The permit of these schemes are also valid throughout India, however, it has to be made sure that the taxes were paid to the corresponding states.
The Motor Vehicles Act does not treat cars registered under Rent-a-Cab License as a “private car” for the purpose of interstate taxes. There is no uniform tax regime in India, and some of the taxes include Road User Tax, Entry Tax on tourist vehicles, Interstate Permit Fee, etc.
 See http://transport.bih.nic.in/Guidelines/Schemes-Rent-A-Cab-1989.pdf