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Report No. 255

A. The Current Law: A Summary Snapshot

2.3. The law regulating election finance in India has to be ascertained after examining the provisions of the RPA and Election Rules, the Companies Act, the IT Act, and the Foreign Contribution (Regulation) Act. This section briefly summarises the law in a tabular form.5

5. The table is a modification of Table 3, in PRS Legislative Research, Financing of Election Campaigns, 18th November 2008 at

Existing Regulation Applicable Law
Limits on Expenditure Yes
  • Between Rs. 54-70 lakhs for Parliamentary constituencies and Rs. 20-28 lakhs for Assembly constituencies
  • Includes party and supporter spending towards a candidate's campaign
  • Excludes expenditure incurred by "leaders of a political party" for travel for propagating the party's program
  • Excludes expenditure by parties or their supporters incurred for generally propagating the party's program as long as no specific candidate is mentioned (given section77's focus is on "candidate" and not party)
  • Section 77, RPA
  • Rule 90, Election Rules, 1961 as amended by Conduct of Elections (Amendment) Rules, 2014 dated 28th February, 2014
Disclosure of Expenditure True copy of account of election expenses of every contesting candidate lodged with the District Election Commissioner within thirty days of election of returned candidate
  • Section 77, 78, RPA
  • Part VIIA, VIII, Election Rules, 1961
Limits on Contribution None
  • No limits on individual contributions
  • Corporate contributions to political parties are allowed as long as the (non- government) company is three years old; its aggregate contribution in every financial year is below 7.5% of its average net profits during the three immediately preceding financial years; and it is authorized by a Board of Directors' resolution
  • Corporate contributions to parties or electoral trusts entitled to deduction from total income
  • Ban on foreign contribution to candidate or political party
  • No limits on political party accepting contribution
  • Section 29B, RPA
  • Section 182(1), Companies Act
  • Section 3 and 4, Foreign Contribution (Regulation) Act, 2010
Disclosure of Contribution
  • By party: Report detailing all contributions above Rs. 20,000 received from any person or company submitted in each financial year to the Election Commission
  • By company: Profit and Loss account will detail the total amount contributed and the name of the party to which contribution made in every financial year
  • Section 29C, RPA
  • Section 182(3), Companies Act
  • Section 13A, section80GGB and 80GGC, IT Act
Public Funding of Election Campaigns Partial
  • No direct State subsidy
  • Partial in kind subsidy in the form of free allocated air time on state owned electronic media (since 1996) to parties based on their past performance
  • Free supply of copies of electoral rolls and identity slips of electors to candidates
  • Section 39A, 78A and 78B, RPA (introduced by the 2003 amendment
Penalties Both civil and criminal in nature and affect
  • The candidate: disqualification from being a voter or standing in elections if convicted of corrupt practices or failure to lodge election expenses (3 years)
  • The party: loses IT exemptions
  • Company: Fines and imprisonment
  • Section 8A, 10A, 11A, 123(6), RPA
  • Section 182(4), Companies Act
  • Section 13A, IT Act

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