How should RUPPs be regulated?, Pg12

Key Highlights:

• A 'BBC News Hindi' investigation revealed that six Registered Unrecognised Political Parties (RUPPs) based in Gujarat received approximately ₹1,700 crores in donations for 2023-24.
• This amount surpassed the total donations of ₹1,480 crores received by five nationally recognised political parties (excluding the BJP) during the same period.
• The Election Commission (EC) currently lists over 2,800 RUPPs, but only about 750 contested the 2024 general elections, leading to concerns about "letter pad parties".
• The Representation of the People Act, 1951, does not explicitly empower the EC to de-register political parties for non-compliance or inactivity.
• The Law Commission and the EC have previously recommended amendments to the RP Act to grant de-registration powers to the EC.

Detailed Insights:

• RUPPs enjoy benefits such as tax exemption on donations under Section 12 of the Income Tax Act, 2025, a common symbol for elections, and 20 'star campaigners'.
• They are mandated to maintain records of individual donations exceeding ₹20,000 and submit them annually to the EC.
• Donations over ₹2,000 must be accepted via cheque or bank transfers as per the Income Tax Act, 2025.
• The Supreme Court, in the Indian National Congress vs Institute of Social Welfare & Ors (2002) case, ruled that the EC lacks inherent power to de-register parties, except in cases of fraud or unconstitutional allegiance.
• Despite the EC de-listing over 800 inactive RUPPs by October 2025, six specific parties from Gujarat remained active by fielding a minimal number of candidates in the 2024 Lok Sabha elections.
• The Association for Democratic Reforms (ADR) reported in July 2025 that only 26% of RUPPs publicly disclose their annual reports, indicating poor compliance and transparency.
• This lack of transparency makes RUPPs susceptible to misuse for tax evasion and money laundering.
• Proposed reforms include de-registration for parties failing to contest elections for ten consecutive years and empowering the EC to act against non-serious parties.
• An alternative to the EC's suggestion of limiting tax exemptions to seat-winning parties is to introduce a vote percentage threshold for RUPPs to avail tax benefits, similar to common symbol allocation.

Key Concepts Involved:

• Registered Unrecognised Political Parties (RUPPs): Political parties registered with the Election Commission but not recognized as national or state parties due to not meeting specific electoral performance criteria.
• Representation of the People Act, 1951: An Act of Parliament to provide for the conduct of elections to the Houses of Parliament and to the House or Houses of the Legislature of each State, the qualifications and disqualifications for membership of those Houses, and other related matters.
• Election Commission of India (ECI): An autonomous constitutional authority responsible for administering election processes in India.
• Money Laundering: The illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions.