The EC's advice came against the backdrop of Income Tax Department's raids in Madhya Pradesh Sunday and in Karnataka, Tamil Nadu and Andhra Pradesh in the recent past on politicians and people connected to them.
Since the Model Code Conduct came into force on March 10, the I-T Department has carried out several raids on political leaders and their associates which the opposition has dubbed a misuse of central agencies during poll season.
There have been nearly 55 raids in the recent past by agencies under the Finance Ministry.
The poll panel's advice came amid allegations that the government was using the agencies to target rival parties in the election season.
In a letter to the Union revenue secretary, the commission said it would like to "strongly advise that all enforcement actions during the election period, even when conducted ruthlessly with a view to curb this blatant electoral malpractice, should be absolutely neutral, impartial and non-discriminatory."
The Income Tax Department, Enforcement Directorate and Directorate of Revenue Intelligence are the executive arm of the Department of Revenue in dealing with financial crimes.
In case of suspected use of illicit money for electoral purposes, the chief electoral officer of the state must be kept "suitably informed" during the model code of conduct period, it said.
The seven-phase Lok Sabha election starts from April 11 and counting will held on May 23.
The Income Tax department has carried out raids in Madhya Pradesh on Sunday and in Karnataka, Andhra Pradesh and Tamil Nadu in the recent past.
The opposition has alleged that rival parties are being singled out by the ruling dispensation in the poll season.
The letter also highlighted that money power with the intention of influencing voters' behaviour has over the years emerged as one of the biggest challenges for conduct of free, fair, ethical and credible elections.
The EC said it is understood that all enforcement agencies working under the administrative control of the Finance Ministry's revenue department must be undertaking enforcement actions based on inputs and actionable intelligence, as per extant laws.
The Income Tax Department Sunday launched pre-dawn raids at 52 locations, including in Delhi and Madhya Pradesh, against close aides of MP Chief Minister Kamal Nath and others on charges of tax evasion and hawala transactions, officials said.
A team of nearly 200 officials from I-T department and state police swooped down on the premises at around 3 am and recovered undisclosed cash amounting to Rs 10-14 crore, they said.
Sources added there is a "strong possibility" of this cash being used as an election inducement to fund political campaigns and bribe voters in the poll-bound state and in Delhi.