Registered Unrecognised Political Parties: Fixing Political Funding Gaps

Registered Unrecognised Political Parties Latest News

• A recent media investigation has revealed that six Registered Unrecognised Political Parties (RUPPs), all based in Gujarat, received donations of around Rs 1,700 crore in 2023-24. This is more than the combined donations of five nationally recognised parties, excluding the BJP, which received Rs 1,480 crore in the same period. 
• The revelation has raised serious concerns about opaque political funding and the misuse of tax exemptions by non-serious parties.

What Are Registered Political Parties

• Political parties are associations or bodies of individuals formed by citizens. 
• Section 29A of the Representation of the People Act, 1951 (RP Act) lays down the requirements for registering a political party with the Election Commission (EC). 
• After scrutiny of the documents submitted, the EC registers the party as RUPP.
• RUPPs enjoy three key benefits:
  • Tax exemption on donations received under Section 12 of the Income Tax Act, 2025.
  • A common symbol for contesting general elections to the Lok Sabha or State Assemblies.
  • Twenty “star campaigners” during election campaigns.
• In return, RUPPs must fulfil certain obligations:
  • Maintain details of individual donors contributing more than Rs 20,000 in a financial year and submit them to the EC annually. 
  • Under Section 29C of the RP Act, failure to do so leads to loss of income tax exemption.
  • Accept donations above Rs 2,000 only through cheque or bank transfer, as required by the Income Tax Act, 2025.

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The Problem of “Letter Pad Parties”

• As per the EC notification, India had more than 2,800 RUPPs as of July, but only around 750 contested the 2024 general elections. 
• The rest have earned the moniker “letter pad parties”, existing largely on paper.
• The core issue is the EC’s limited power. The RP Act does not explicitly empower the EC to de-register a party that fails to contest elections, conduct inner-party elections or file required returns. 
• In Indian National Congress vs Institute of Social Welfare & Ors (2002), the Supreme Court held that the EC cannot de-register a political party under the RP Act, except in exceptional circumstances:
  • Registration obtained by fraud.
  • The party ceasing to owe allegiance to the Constitution.
  • The party being declared unlawful by the government.
• The EC periodically publishes lists of de-listed RUPPs. The October 2025 notification contained over 800 such parties.

Why the Six Gujarat Parties Remain Active

• The six parties named in the investigation are Aam Janmat Party, Bharatiya National Janata Dal, Garib Kalyan Party, New India United Party, Satyawadi Rakshak Party and Swatantrata Abhivyakti Party. 
• All remain on the EC’s active list as of October 2025 because they collectively fielded 15 candidates in the 2024 Lok Sabha elections. 
• Contesting a token number of seats allows them to retain their registration and tax benefits.

Poor Compliance and Lack of Transparency

• The Association for Democratic Reforms (ADR) periodically publishes reports on RUPP compliance. 
• Its July 2025 report, analysing annual reports for 2022-23, found that reports of only 26 per cent of RUPPs were available in the public domain. 
• Poor compliance with statutory requirements, combined with weak transparency, allows these parties to function as opaque channels for tax evasion and money laundering.

Way Forward

• Empower the EC to de-register parties. The Law Commission, in its 255th report, recommended amendments to allow de-registration of a party that fails to contest elections for ten consecutive years. 
  • The EC, in its 2016 memorandum on electoral reforms, also sought powers to de-register parties. 
  • These reforms would enable action against non-serious parties that serve merely as a front for illegal financial transactions.
• Strengthen enforcement. Even if de-registration powers are granted, parties may contest a few seats simply to meet the statutory requirement while continuing to misuse tax exemptions. 
  • In today’s digital environment, the Income Tax Department and other enforcement agencies can easily monitor the transactions of such parties. 
  • Strict action against wrongdoing would act as a deterrent.
• Introduce a vote threshold for tax exemptions. The EC had earlier suggested that tax exemptions be given only to parties that win seats in the Lok Sabha or State Assemblies. 
  • Analysts consider this undemocratic and extreme, since many parties contest elections consistently without winning. 
  • Instead, they propose a vote percentage threshold, similar to the 1 per cent vote threshold used for allotting common symbols to RUPPs. 
  • Only parties crossing this threshold should be eligible for tax exemptions on donations.

Conclusion

• The RUPP framework was designed to nurture political participation, but weak statutory provisions and poor compliance have turned it into a loophole for opaque funding. 
• Empowering the EC to de-register non-serious parties, strengthening enforcement and linking tax exemptions to a reasonable vote threshold would restore integrity to political funding without stifling genuine small parties.

Source: TH | BL