"The Jaipur team has been penalised for spending less than the mandatory amount in Wednesday's players' auction," IPL Chairman Lalit Modi said.
"In penalty, they will have to pay the difference to the orgnisers," he said.
Five of the eight franchises, however, spent more than the maximum limit of USD 5 million.
As per the IPL rules if a player is expected to be "either completely unavailable or only available for less than four of the matches in 2008, 25 per cent of the fee bid for that player in the auction will count against the $ 5 million purse".
Jaipur have bought Mohammad Kaif (Rs 2.7 crore), Graeme Smith (Rs 1.9 crore), Yusuf Pathan (Rs 1.9 crore), Shane Warne (Rs 1.7 crore), Munaf Patel (Rs 1.1 crore), Younis Khan (Rs 90 lakh), Kamran Akmal (Rs 60 lakh), Justin Langer (Rs 80 lakh).