How should RUPPs be regulated?

Why in the News

Six Registered Unrecognised Political Parties (RUPP) based in Gujarat received donations of about Rs 1,700 crore in the 2023 to 2024 financial year. A RUPP is a party registered with the Election Commission of India (EC) that has not met the vote and seat tests for recognition as a State or a national party. That single figure exceeds the Rs 1,480 crore received in the same period by five nationally recognised parties other than the Bharatiya Janata Party. The six remain on the list of active parties because they fielded candidates in the last general election. Registration brings tax exemption and a common symbol, and the law gives the Election Commission almost no power to remove a party that does nothing else.

What is a Registered Unrecognised Political Party?

1. The registering provision: Section 29A of the Representation of the People Act, 1951 (RP Act) sets out the requirements for registering a political party with the Election Commission.
2. How registration happens: The Commission registers a party as a RUPP after satisfactory scrutiny of the documents submitted to it.
3. Tax exemption on donations: Donations received are exempt under Section 12 of the Income Tax Act, 2025.
4. Electoral privileges: A RUPP gets a common symbol for contesting general elections to the Lok Sabha and the State Assemblies, and is allowed 20 star campaigners during a campaign.

What must a RUPP disclose, and what follows if it does not?

1. Donor records above a threshold: Details of individual donors giving more than twenty thousand rupees in a financial year must be maintained and submitted to the Election Commission every year.
2. The penalty for non disclosure: Under Section 29C of the RP Act, failure to furnish those details results in loss of income tax exemption.
3. A cap on cash: Donations above two thousand rupees may be accepted only by cheque or bank transfer under the Income Tax Act, 2025.

Why do parties that never seriously contest stay on the register?

1. The gap between registration and contest: India had more than 2,800 RUPPs as of July, and only around 750 contested the 2024 general elections.
2. The label that followed: The remainder are described as “letter pad parties”, since registration is all they maintain.
3. No power to deregister: The RP Act confers no explicit power on the Election Commission to remove a party from the register for failing to contest elections, hold internal elections or lodge required returns.
4. The position in law: In Indian National Congress v. Institute of Social Welfare and Others (2002) the Supreme Court held that the Commission has no power to deregister a political party under the RP Act.
5. The narrow exceptions: Removal is available only where registration was obtained by fraud, where the party ceases to have allegiance to the Constitution, or where it is declared unlawful by the government.
6. Delisting is not removal from the register: The Commission periodically publishes a list of delisted RUPPs, and its notification of October 2025 carried over 800 such parties.
7. A minimal contest keeps a party active: The six Gujarat based parties stayed on the active list by fielding a total of 15 candidates in the 2024 Lok Sabha elections. Eg. They are the Aam Janmat Party, Bharatiya National Janata Dal, Garib Kalyan Party, New India United Party, Satyawadi Rakshak Party and Swatantrata Abhivyakti Party.

What does the compliance record show?

1. Most annual reports never reach the public: A July 2025 report of the Association for Democratic Reforms (ADR), analysing annual reports for 2022 to 2023, found reports of only 26% of RUPPs available in the public domain.
2. What weak compliance enables: Poor compliance with statutory requirements together with low transparency lets these parties serve as an opaque channel for tax evasion and money laundering.
3. The scale problem: A register of thousands of entities, most of which never contest, cannot be policed through annual return scrutiny alone.

What reforms have been proposed?

1. The Law Commission’s recommendation: The 255th report of the Law Commission recommended amendments allowing removal from the register of a party that fails to contest elections for ten consecutive years.
2. The Election Commission’s own proposal: Its memorandum on electoral reforms of 2016 sought an amendment to the RP Act empowering it to deregister a party.
3. Enforcement rather than registration alone: Transaction level monitoring by the Income Tax Department and other enforcement agencies is feasible with digital records and would act as a deterrent against misuse of exemptions.
4. Linking exemption to electoral success: The Election Commission has suggested that tax exemption be confined to parties that win seats in the Lok Sabha or a Legislative Assembly.
5. Why that proposal is contested: Confining exemption to winners is open to the objection that it is undemocratic and extreme, since parties contest consistently without electoral success.
6. A vote share threshold instead: A vote percentage threshold fixed by law could govern eligibility for tax exemption, on the model of the 1% vote threshold already used for allotting common symbols to RUPPs.

Challenges to regulating Registered Unrecognised Political Parties

1. Entry is easy and exit is absent: The statute sets a documentary threshold for entry and provides almost no route out, so the register only grows. Eg. The number of registered parties has risen steadily across successive general elections.
   The Fix: Provide for statutory lapse of registration where a party files no return and contests no election within a fixed period.
2. Token candidature defeats a contest based test: A party that fields a handful of candidates satisfies any rule keyed to mere participation while doing nothing else. Eg. A large share of candidates in a general election forfeit their security deposit for polling below one sixth of valid votes.
   The Fix: Key the test to a minimum vote share rather than to the act of contesting.
3. Tax exemption is the actual prize: Exemption on donations makes registration valuable to entities with no electoral purpose at all. Eg. Tax investigations into registered unrecognised parties have found arrangements in which most of a donation was returned to the donor in cash against a commission.
   The Fix: Make exemption conditional on an audited annual return filed on time, rather than automatic on registration.
4. Disclosure thresholds leave most money invisible: Only contributions above the reporting threshold must be itemised, so funds can be split into smaller amounts. Eg. Parties routinely report large sums under the head of voluntary contributions from unnamed donors.
   The Fix: Require itemised reporting of every contribution above the cash limit, aligning the disclosure threshold with the banking channel threshold.
5. Enforcement is split across agencies with different mandates: The Election Commission holds the register and the Income Tax Department holds the financial trail, and neither can act on the other’s finding. Eg. Delisting by the Commission does not by itself withdraw an exemption already claimed.
   The Fix: Provide for automatic reference from the Commission to the tax authority on default, with a statutory timeline for action.

Conclusion

Regulation here has been treated as a records problem when it is a design problem. The register was built to be easy to enter, because a democracy should not gate the formation of parties, and nothing was built to remove an entity that stops behaving like one. Every measure repeatedly proposed shifts the test from whether a party exists on paper to whether it seeks votes. Whether Parliament is willing to give the Election Commission that power, having left the position untouched since the Court described the gap, is what decides the outcome.

Back2Basics: Recognition of political parties in India

1. Who decides: The Election Commission recognises a party as a State party or a national party under the Election Symbols (Reservation and Allotment) Order, 1968.
2. State party test: Recognition in a State requires a fixed share of valid votes together with seats in the Assembly or the Lok Sabha from that State, or a minimum number of Lok Sabha seats from it.
3. National party test: Recognition as a national party requires recognition as a State party in at least four States, or a fixed vote share along with Lok Sabha seats from several States.
4. What recognition brings: A recognised party gets a reserved symbol, free broadcast time on public service media, a larger number of star campaigners and copies of the electoral roll.

Matching Previous Year Question

“[2024, GS2, 10 marks] Examine the need for electoral reforms as suggested by various committees with particular reference to “one nation-one election” principle.”