Jaitley said that if the tax base and collection rise, then the government's ability to give concessions in terms of rates to honest taxpayers will also go up.

"The parallel economy has to be squeezed...and (it) has to be done in a very fair manner, not in a harsh manner. In doing so, as senior officers you have to maintain the highest standards of integrity," he said addressing a conference of top officials of the Central Board of Direct Taxes (CBDT).

On the new black money law which seeks to bring back the illicit funds stashed abroad, Jaitley said, "No honest taxpayer has anything to fear. It is targeted only against those who have stashed assets abroad."

He said the department will come out with its policy that those who have wealth outside were being given a compliance window on taxation which have been imposed on the assets outside.

"There are steps which have been announced and some may be announced in future with regard to squeezing the quantum of black money. If the base increases, collection increases and those who have to pay taxation are compelled to pay it. The ability of government to give concession in terms of rates to honest tax payers also increases," Jaitley said.

The government, the Minister said, has taken a host of measures to curb the menace of black money. These include passage of the black money law by Parliament and introduction of Benami Transactions (Prohibition) bill to deal with the unaccounted domestic wealth.

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