Senior police officer M. Gupta said the attack occurred Saturday in the Sukma area, about 215 miles (345 kilometers) south of Raipur, the capital of Chhattisgarh state.
The convoy was attacked in a forested area as the Congress members were returning to the state capital after attending a party rally, said Ram Niwas, a state police official.
Two state party leaders and five police officers were among those killed, said R.K. Vij, another police officer. Other victims were party supporters.
"We are devastated," said Congress party President Sonia Gandhi, who denounced what she called a "dastardly attack" on the country's democratic values.
Prime Minister Manmohan Singh said the government would take firm action against the perpetrators.
Police identified one of those killed as Mahendra Karma, a Congress leader in Chhattisgarh state who founded a local militia, the Salwa Judum, to combat the Maoist rebels. The anti-rebel militia had to be reined in after it was accused of atrocities against tribals - indigenous people at the bottom of India's rigid social ladder.
The wounded Congress party members, among them 83-year-old Vidya Charan Shukla, a former federal minister, were taken to a hospital, police said.
Police on Sunday found 11 more bodies near the scene of the ambush, bringing the death toll to 28. They included a local Congress leader and his son who were earlier believed to have been abducted by the attackers, police officer Alok Nath said.
The Press Trust of India news agency said the attackers blocked the road by felling trees, forcing the convoy to halt. Vij said the suspected rebels triggered a land mine that blew up one of the cars. The attackers then fired at the Congress party leaders and their supporters before fleeing.
The Congress party is the main opposition party in the state. It has stepped up political activities ahead of state elections scheduled to be held by December.
The rebels, known as Naxalites, have been fighting the central government for more than four decades, demanding land and jobs for tenant farmers and the poor. They take their name from the West Bengal village of Naxalbari where the movement began in 1967. The fighters were inspired by Chinese Communist revolutionary leader Mao Zedong and have drawn support from displaced tribal populations opposed to corporate exploitation and official corruption.
Prime Minister Singh has called the rebels India's biggest internal security threat. They are now present in 20 of India's 28 states and have thousands of fighters, according to the Home Ministry.
In 2010, Maoist rebels killed 27 paramilitary troops in an ambush in a dense forest in the Narayanpur district of Chhattisgarh state.
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