New Delhi: In a bid to keep a check on expenditure incurred by political parties, the Union Finance Ministry has set up a special investigation unit to regulate the funding and donations made to them.

The new unit named as -- Investigation 5-- will function under the Central Board of Direct Taxes (CBDT) and probe into the cases related to income tax.

Official sources said the unit would be headed by the Commissioner rank officer of the I-T department who will directly report to the CBDT Chairman.

Finance Minister Pranab Mukherjee has recently given approval to set up the unit.

The investigating unit has been created against background of the decision taken by Election Commission (EC) on creating a separate cell to monitor the expenditure incurred by political parties, for which EC deployed huge strength of I-T sleuths of investigation wings across the country for conduct of polls.

It is noteworthy that, the expenses and donations of parties are constantly being questioned. Yet the there was no such system to monitor such transactions. But after initiative taken from the Election Commission, the Ministry of Finance has decided to set up a separate investigating unit under CBDT.

The unit would help in building the pressure on Political parties to follow tax rules and would also probe and review the tax exemptions given to political parties.

Besides, the Ministry has created another unit to monitor the sensitive taxpayer information database of I-T department. Prior to this, there are three existing unit already function in I-T Department.

With the formation of two new units, the department has total of five investigation units. The new units will deal with only specialised subjects.

The Unit 5 will also deal with matters related to the newly created Directorate of Criminal Investigation (I-T), under which the unit can also appoint 'Special Agents', which will further support the unit in investigation.