Rao was an MLA from the ruling TDP party. He was elected from Araku constituency on YSR Congress Party ticket in the 2014 elections, defeating Soma of the TDP.
He later switched to TDP in 2016.
Many people are reported to be injured in the Maoist attack which took place near Thottangi village, about 125 km from coastal city of Visakhapatnam.
The two leaders were killed when they were attending a programme on Sunday morning in the Thottangi village of Araku.
Araku constituency is reserved for the Scheduled Tribes.
According to the police, both Rao and Soma had received threats from Maoists in the past.