A car owner can now accept payment from passengers who hitch a ride.
This and other rules and regulations governing carpooling came into effect on Monday under the Road Traffic Act in an effort to bring legal clarity to what was a grey area.
The move is also expected to boost car sharing, which in turn should ease congestion on the roads and on public transport.
The new laws state that it is illegal for drivers to solicit for passengers on the road, in public spaces or parking lots.
A vehicle is primarily for the motorist's own use and not bought for the sole purpose of offering paid rides.
Destinations of passengers must be clarified before the journey and drivers cannot offer more than two rides per day.
The most interesting inclusion to the laws allows drivers to accept monetary compensation or payment in kind for offering rides - though it should not be for profit.
"The amount or the value of any benefit in kind that the person collects from the passenger as payment does not exceed the cost and expenses incurred for the carriage of the passenger," the statute reads.
If there is more than one passenger in the car, the total payment must not exceed the expenses incurred for the trip - such as the cost of fuel or electronic road-pricing charges.
Technopreneur Moh Hon Meng, 46, who started ShareTransport.sg in 2012, welcomes the new laws.
"The biggest obstacle to carpooling taking off is that people are unsure of what the law says," he said, adding that people will now be more willing to do so.
On average, about 1,300 carpooling messages are posted on ShareTransport.sg each month. Mr Moh said he does not charge users, but will work with commercial entities such as oil companies and tyre retailers to offer services on his site to generate revenue.
Several car owners The Straits Times spoke to, however, said they would still not offer rides, citing inconvenience and privacy, among other things. But businessman Thomas Lim, 62, believes it is "a good idea", adding: "I'm all for it."
Public transport users also gave it the thumbs-up.
Human resource consultant Henry Ling, in his 60s, said: "It makes sense for people going in the same direction to carpool... rather than driving with four empty seats."
Lawyer Bryan Tan, 44, who commutes by taxi, said his main reservation is safety. "I need to know that the persons I'm sharing the ride with are safe."