Data shows that many Registered Unrecognised Political Parties are being used as fronts to launder money. Not only must the ECI act against them, but a wider crackdown is needed, involving other agencies and tighter laws.
The New India United Party (NIUP), based in Gujarat, declared a total income of Rs.291.634 crore for 2024–25 in its financial reports submitted to the Election Commission of India (ECI). It is a Registered Unrecognised Political Party (RUPP), which means it has not met the minimum vote share criterion required to be counted amongst the recognised national and State parties. Although many political parties fall under this category, what is intriguing is the NIUP’s income, which is hugely disproportionate to its electoral significance.
Formed in 2018, the NIUP reported a sudden spurt in income in 2022–23 when its total declared income was Rs.407.45 crore. In 2023–24, it declared high-value contributions (above Rs.20,000) of Rs.200.685 crore. In 2024–25, its income was the highest among RUPPs. Its spectacular record with regard to the donations it has received in the last few years contrasts starkly with its electoral presence. Its blink-and-you-miss participation in the recent State elections in Gujarat, Delhi, and Bihar and in the Lok Sabha election in 2024 garnered just about 10,000 votes cumulatively.
On October 29, 2026, the Association for Democratic Reforms (ADR) published a report titled “Analysis of the Status of Submission of Annual Reports of Registered Unrecognised Political Parties (RUPPs) During FY 2024-25”. According to this report, the top 15 RUPPs declared Rs.1,064.705 crore in donations above Rs.20,000 but did not win a single seat in the elections held in 2024–25. The report also found that 14 of these RUPPs reported higher figures for high-value donations than their total declared income, creating a glaring accounting absurdity.
At Rs.973.93 crore, the income of these 15 RUPPs alone in 2024–25 is comparable to that of 36 regional parties, which together earned Rs.1,192.944 crore. According to the ADR, between 2020–21 and 2024–25, the top 15 RUPPs collected a total income of Rs.3,827.368 crore and Rs.5,180.85 crore in donations above Rs.20,000, yet won only 1 seat out of the 35 contested.
As much as 70.34 per cent of the total reported income (Rs.2,692.1346 crore out of Rs.3,827.368 crore) and 64.73 per cent of donations above Rs.20,000 (Rs.3,353.56 crore out of Rs.5,180.85 crore) was concentrated in six parties based in Gujarat.
For example, in this period, the Bharatiya National Janata Dal, another little-known party based in Gujarat, earned a total income of Rs.1,156.07 crore, which was the highest for an RUPP in this period. Formed in February 2009, the party has contested a few seats in the Assembly elections in Gujarat since 2012 and in the Lok Sabha elections since 2014 but has not won a single one. It even contested three seats in the West Bengal Assembly election in 2026 and got a total of 1,247 votes.
The remaining 9 of the top 15 RUPPs were registered elsewhere: 4 in Delhi (including Prashant Kishor’s Jan Suraaj Party, which is as yet considered an RUPP because it is still new in the field), 2 in Bihar, 2 in Haryana, and 1 in Rajasthan.
Such donations to little-known political entities with minimum electoral activity raise questions. In recent years, RUPPs have come under the scrutiny of the ECI and income tax authorities and other law enforcement agencies as suspected fronts for money laundering and tax evasion.
A party has to either win a certain minimum number of seats or secure a certain minimum percentage of votes in the last Lok Sabha or State Assembly election to become a recognised political party. RUPPs include newly formed parties that are yet to make an impact in elections, parties that have contested without success, and those that have not contested any elections.
A recognised political party gets benefits that are not available to an RUPP, such as the allotment of an exclusive election symbol (an RUPP has to choose from a list of free symbols issued by the ECI), free copies of electoral rolls, free broadcast time on All India Radio or Doordarshan during elections, and subsidised land to build a party office.
However, RUPPs can still receive donations from individuals and organisations under Section 29B of the Representation of the People Act, 1951. They are exempt from income tax under Section 12, read in conjunction with Schedule VIII of the Income Tax Act, 2025, on the condition that they file their income tax returns and submit to the ECI contribution reports detailing amounts received that are in excess of Rs.20,000. In addition, under Sections 136 and 137 of the Income Tax Act, donors can claim a tax deduction for the full amount contributed to political parties.
Under the ECI’s guidelines on transparency and accountability in party funds and election expenditure, RUPPs must submit annual audited accounts, contribution reports, and statements of election expenditure to the respective State Chief Electoral Officers (CEOs).
However, the number of RUPPs has risen sharply in the last two decades, and they have shown grossly inadequate compliance with the ECI’s requirements on reporting their finances, even as there is growing evidence of these parties being involved in financial wrongdoing.
In 2001, there were 694 RUPPs; their number rose to 2,796 in 2021. At present, there are 2,074 RUPPs. The ECI’s list of recognised parties comprises 6 national parties and 67 State parties. The ADR report analysed the annual reports of 734 RUPPs, or 35 per cent of the total. Neither the annual audit nor the contribution report is available for a significant 65 per cent (1,330) of the total RUPPs. Only audit reports for 159 RUPPs (or 7.67 per cent of the total) were available, while 114 RUPPs (or 5.50 per cent) had submitted contribution reports alone.
The RUPPs enjoy full tax exemption on their incomes, and donors too have been claiming tax deductions under the Income Tax Act for donations to what could be fradulent entities. The result is a loss of revenue to the exchequer.
According to ECI officials, the process used to launder money or evade tax involves various layers through which the money moves and changes hands after it is donated to an RUPP. Investigations by law enforcement agencies into the working of errant RUPPs have indicated that the money may pass through a chain of sham entities using normal banking channels before it is withdrawn as cash, which is returned to the donor, with a commission paid to the masterminds.
One indication that the operation is taking place on a large scale is the ADR’s finding that 13 of the 15 RUPPs spent between 94 per cent and 100 per cent of their total declared income within the same period despite their political inactivity and even in the years when no elections took place. As per the ADR report, these parties report significant portions of their annual spending under broad, ambiguous terms such as “public welfare”, “social welfare expenses”, “for main objects”, “charitable objects”, “general propaganda”, or “miscellaneous expenses”.
According to ECI officials, the proliferation of RUPPs gives rise to the possibility that these entities are either misusing or trading electoral entitlements such as access to public space for campaigning, priority claim on free symbol, and access to first-level check of electronic voting machines. There is also the possibility of these parties fronting as proxies for other political parties and participating in informal political groupings in order to receive funds.
The Supreme Court steps in
The Supreme Court is now aware of the issue of misuse of RUPPs. On October 15, 2026, a two-judge bench comprising Justices Vikram Nath and Aparesh Kumar Singh issued notices to the ECI, the Centre, the Central Board of Direct Taxes, and a few RUPPs in Gujarat in response to applications filed in the K.S. Bhati v. Election Commission of India matter seeking directions to curb the misuse of RUPPs. The original petition challenges the provisions in the Income Tax Act that allow political parties to receive cash donations up to Rs.2,000, while allowing them to claim tax exemption.
The senior advocate Vijay Hansaria, who appeared for the petitioner, has pointed out that many of these delisted parties receive donations and get tax exemptions. He said that they are liable to pay tax as they are not eligible to get exemption. Hansaria added: “RUPPs are, in fact, shell political parties who register themselves under the Representation of the People Act only to avail [themselves of] the benefit of 100 per cent tax exemption and pass on the benefit to the so-called donors by way of money laundering.”
In 2022, the ECI initiated a major clean-up of RUPPs, starting with the verification of details such as addresses and particulars of the office-bearers, and delisting (removing from the list of registered parties) those who were found to be absent at their given addresses. It also delisted parties that had failed to contest a single election in six years.
Between May and September 2022, the ECI delisted 537 RUPPs either for not providing the commission with a genuine address or for not contesting a single election. The ECI further delisted 334 RUPPs in August 2025 and 474 more in September 2025 for either failing to contest elections for six consecutive years or for not submitting the annual audited accounts for 2021–22, 2022–23, and 2023–24.
Major General (retd) Anil Verma, who currently heads the ADR, said: “It has come to light that most of these parties are non-existent, with no office at the address submitted to the ECI, with the people whose names are given as office-bearers in many cases clueless about the financial dealings. It appears that this is a well-entrenched network converting black money into white. It has been made clear from investigations by the Income Tax Department and the law enforcement agencies that many of these parties are like shell companies run by chartered accountants.”
In 2022, the ECI submitted a list of 2,174 RUPPs that had not submitted their contribution reports to the Department of Revenue. The Income Tax Department conducted raids on 23 RUPPs in 110 locations across the country in September 2022.
On September 28, the Gujarat Police said they had registered FIRs against several RUPPs on complaints from the Income Tax Department alleging that the parties were involved in financial malpractice that had caused a loss of over Rs.680 crore to the exchequer. The FIRs allege that the parties returned the contributions they received to the donors after deducting a commission, acting in collusion with chartered accountants who created bogus financial reports for them.
Hansaria said: “The Enforcement Directorate should register a case, and the assets of all shell political parties that have been delisted by the ECI should be confiscated as proceeds of crime. Donations to the Prime Minister’s Relief Fund, the Chief Minister’s Relief Fund, or the National Disaster Relief Fund are entitled to 100 per cent exemption, and if these political parties are also getting 100 per cent exemption, strict compliance must be ensured by the income tax authorities.”
Since the ECI does not have the power to cancel the registration of parties, it has been delisting errant RUPPs, which bars them from getting a symbol to contest elections and also makes them ineligible for tax exemptions.
Verma said the ECI should continue delisting parties but emphasised the need for greater monitoring of RUPPs and a more proactive system to weed out those that are functioning only as letterhead parties.
Verma also said there are many CEO websites that do not display the list of RUPPs and the status of the submission of financial reports by them. Calling for greater alacrity on the part of State CEOs in monitoring RUPPs, he said: “The State CEOs need to wake up and be more enthusiastic about cleaning up the RUPPs. The onus cannot be solely on the national headquarters of the ECI alone.”