Registered Unrecognised Political Parties (RUPP) Regulation

Syllabus: GS2/Polity and Governance

Context

• A ‘BBC News Hindi’ investigation has revealed that six Registered Unrecognised Political Parties (RUPP) had received donations of around ₹1,700 crores for the year 2023-24. 

About Political Parties

• Political parties are an association or body of individuals that can be formed by citizens. 
• Section 29A of the Representation of the People Act, 1951 (RP Act) lays down the requirements for registration of a political party with the Election Commission (EC).
  • After satisfactory scrutiny of the documents submitted, the EC registers a political party as a RUPP. 
• The RUPPs enjoy the following benefits: 
  • tax exemption for donations received under Section 12 of the Income Tax Act, 2025, 
  • common symbol for contesting general elections to the Lok Sabha/State Assemblies, 
  • and 20 ‘star campaigners’ during the election campaign. 
• Donations to RUPPs: The RUPPs are required to maintain the details of individual donors above twenty thousand rupees in a financial year and submit them to the poll body every year.
  • The RUPPs, under the Income Tax Act, 2025, are required to accept donations in excess of two thousand rupees only through cheque or bank transfers.
  • As per section 29C of the Representation of the People Act, failure to furnish these details will result in losing income tax exemption.

Concerns

• As per the EC notification, India had more than 2,800 RUPPs as of July, but only around 750 contested the 2024 general elections. 
  • This has resulted in the moniker — ‘letter pad parties’ — for the rest of the RUPPs. 
  • Poor compliance with statutory requirements, coupled with a lack of transparency, results in these ‘letter pad’ parties being used as an opaque channel for tax evasion and money laundering.
• Deregistration of Such Parties: The RP Act does not confer explicit powers on the EC to de-register a political party if it fails to contest elections, conduct inner-party elections, or lodge requisite returns.
  • In the Indian National Congress vs Institute of Social Welfare & Ors (2002), the Supreme Court held that the EC does not have the power to de-register any political party under the RP Act. 
  • It may de-register only under exceptional circumstances, such as registration obtained by fraud, the political party ceasing to have allegiance to the Constitution, or being declared unlawful by the government. 

Recommended Reforms

• The Law Commission, in its 255th report, had recommended amendments for de-registration of a political party if it fails to contest elections for ten consecutive years. 
• The EC, in its memorandum for electoral reforms (2016), also suggested an amendment to the RP Act that would empower it to de-register a party. 
• The EC had also suggested that tax exemptions be provided only for political parties that win seats in Lok Sabha or Legislative Assembly elections.
  • This can be viewed as an undemocratic and extreme measure, as there are parties that consistently contest elections without electoral success. 
  • Instead, similar to the 1% vote threshold for allotting common symbols to RUPPs, a suitable vote percentage threshold may be stipulated by law for RUPPs to avail of tax exemptions on donations received.

Way Ahead

• These are long-pending reforms that need to be carried out to empower the EC to act against non-serious parties.
• In the present digital world, it is not difficult for the Income Tax Department and other enforcement agencies to monitor the transactions of such parties and take strict action against any wrongdoing. 
• This would act as a deterrent against the misuse of the benefits and exemptions available to political parties. 

Source: TH