News: Six Gujarat-based RUPPs reportedly received around ₹1,700 crore in donations (2023–24), raising concerns over transparency, tax exemptions and financial misuse.

RUPPs – Basics

• Section 29A, RP Act, 1951 → ECI registers political parties.
• Parties not meeting State/National recognition criteria → RUPPs.
• Benefits → Tax exemption + common symbol (subject to conditions) + up to 20 star campaigners.
• Donations > ₹20,000 → Donor details must be disclosed to ECI.
• Donations > ₹2,000 → Must be through banking channels as prescribed.

Major Concern: ‘Letter Pad Parties’

• India had 2,800+ RUPPs, but only ~750 contested 2024 Lok Sabha elections.
• Some parties exist largely on paper, raising concerns about misuse of political-party benefits.
• ADR (2025) → Reports of only 26% of RUPPs were publicly available.

De-registration Issue

• RP Act does not explicitly give ECI general power to deregister parties for not contesting elections or failing to conduct internal elections.
• SC – Indian National Congress v. Institute of Social Welfare (2002) → ECI has no general de-registration power.
• Exceptional cases → Registration through fraud + loss of allegiance to Constitution + party declared unlawful.

Way Forward

• Empower ECI → Law Commission 255th Report suggested de-registration after 10 consecutive years without contesting elections.
• Financial monitoring → I-T Department + enforcement agencies should track suspicious transactions.
• Vote threshold for tax benefits → Link tax exemptions to a minimum vote share rather than merely contesting elections.
• Greater transparency → Mandatory and timely submission/public disclosure of financial and statutory reports.

Core Issue:

• RUPPs → Political participation + financial benefits
• Need to balance democratic freedom with financial transparency + accountability.