Regulation of Registered Unrecognised Political Parties (RUPPs)

11 Sep 2026

Tags: Polity & Constitution   Electoral System   Key electoral mechanisms

Source: The Hindu

Context: A BBC News Hindi investigation found that six Gujarat-based Registered Unrecognised Political Parties (RUPPs) received around ₹1,700 crore in donations in 2023–24, exceeding the ₹1,480 crore received collectively by five nationally recognised parties other than the Bharatiya Janata Party (BJP).

 

Registration and Benefits of RUPPs

• Legal basis: Under Section 29A of the Representation of the People Act, 1951 (RP Act), citizens can form political parties and seek registration with the Election Commission of India (ECI) after fulfilling prescribed requirements.
• Key benefits: Registered parties receive income-tax exemption on eligible donations, a common symbol for Lok Sabha/State Assembly elections, and can nominate up to 20 star campaigners.
• Disclosure requirement: RUPPs must report details of individual donors contributing more than ₹20,000 in a financial year; failure to submit these details results in loss of income-tax exemption.
• Mode of donations: Under the Income Tax Act, 2025, donations exceeding ₹2,000 must be received through cheque or banking channels.

The ‘Letter Pad Party’ Problem

• India had over 2,800 RUPPs as of July, but only around 750 contested the 2024 Lok Sabha elections, leading to the term ‘letter pad parties’ for largely inactive entities.
• The RP Act does not explicitly empower the ECI to deregister parties for not contesting elections, failing to conduct internal elections or not filing statutory returns.
• In Indian National Congress v. Institute of Social Welfare & Ors. (2002), the Supreme Court held that the ECI generally lacks deregistration powers under the RP Act, except in exceptional cases such as fraudulent registration, loss of allegiance to the Constitution or declaration as an unlawful association.
• The ECI periodically removes/delists inactive RUPPs; its October 2025 notification listed over 800 such parties.

Compliance and Transparency Concerns

• Six Gujarat-based RUPPs remained active because they collectively fielded 15 candidates in the 2024 Lok Sabha election, thereby meeting the existing requirement for continued registration.
• According to the Association for Democratic Reforms (ADR), only 26% of RUPPs’ annual reports for 2022–23 were available in the public domain as of its July 2025 analysis.
• Poor statutory compliance and limited financial disclosure create risks of RUPPs being misused as opaque channels for tax evasion, money laundering and other illicit financial transactions.

Why Deregistration Reform Is Needed

• Law Commission: Its 255th Report recommended empowering deregistration of parties that fail to contest elections for 10 consecutive years.
• ECI proposal: In its 2016 electoral-reforms memorandum, the ECI sought statutory power to deregister parties, addressing the existing legal limitation.
• Such reforms could enable the ECI to act against non-serious parties that exist primarily to access electoral and tax-related benefits.

Strengthening Financial Oversight

• Merely requiring inactive parties to contest elections could be insufficient because parties might contest symbolically simply to retain tax exemptions and other benefits.
• The Income Tax Department and enforcement agencies can increasingly use digital financial trails to monitor transactions and investigate suspicious activities, creating a stronger deterrent against misuse.
• Effective enforcement should therefore accompany any deregistration mechanism rather than relying solely on electoral participation.

Should Tax Exemption Have a Vote Threshold?

• The ECI had proposed restricting tax exemptions to parties that win seats in Lok Sabha or State Assemblies, but this could disadvantage genuine parties that regularly contest elections without winning.
• A minimum vote-share threshold may offer a more proportionate solution, similar to the existing 1% vote threshold for allotment of common symbols to RUPPs.
• Linking tax benefits to a reasonable electoral-support threshold could improve financial accountability without excluding legitimate emerging or smaller political parties.

Way Forward

• Electoral regulation should balance political pluralism with financial transparency by strengthening ECI powers, enforcing annual disclosure requirements and introducing proportionate eligibility criteria for tax benefits.
• A combination of deregistration for prolonged inactivity, transparent financial reporting, digital transaction monitoring and a reasonable vote-share threshold can reduce the misuse of RUPPs while protecting genuine political competition.