New Delhi: Government will shortly set up a Financial Intelligence Unit (FIU) to tackle economic offences while stepping up efforts to catch tax evaders and double the tax base to 5.0 crore assessees by 2005.

"We are in the process of finalising the terms and conditions of the FIU. It will come up very soon," revenue secretary S Narayan said at a conference of director generals of Income Tax.

The move comes after a recommendation by a group of ministers, which mooted a specialised unit to look at various economic offences like terrorist funding, narcotics and tax evasion, in the liberal economic scenario.

Although illegal FOREX deals are no longer treated as criminal offence after Foreign Exchange Regulation Act was replaced by Foreign Exchange Management Act, Narayan said, "Our primary duty is to monitor movement of money across the border and ensure it does not go tax free."

He also indicated that cash transactions beyond a certain limit (say Rs 50,000) would come under the lenses of taxmen.

Pointing to loopholes in new the system, he said, "What is lacking, is information from banks about movement of funds, which are not reported properly."

Narayan regretted about the absence of database and memory of past cases of tax evasion, saying, "Unless we build a database, investigations cannot be carried out. We require a database of at least 10 to 15 years."

Apart from white-collared crimes, he said that government has stepped up efforts to increase the tax base to Rs 5 crore by 2004-05 from Rs 2.8 crore by focusing on tax evaders in the income slab of Rs 5 lakh and above.

PTI