New Delhi, May 25 (IANS): Finance Minister Arun Jaitley on Monday asked the Income Tax department to squeeze the parallel economy, also called black economy, in a fair manner without being harsh.

"The parallel economy has to be squeezed and this 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 standard of integrity," Jaitley said, addressing the annual conference of senior officials of the Central Board of Direct Taxes (CBDT).

"Black money has to be squeezed," he said, adding that the government has taken a series of measures to curb black money, including passage of the black money law by parliament and the introduction of the Benami Transactions (Prohibition) Bill to deal with domestic illegal wealth.

"No honest taxpayer has anything to fear. It's (black money law) is targeted only against those who have stashed assets abroad," the finance minister said.

He said only those have to worry who had defied the system in the past and intend to defy the compliance window to come clean.

Earlier this month, parliament approved the Undisclosed Foreign Income and Assets Bill providing for heavy penalties for stashing black money away in foreign accounts. The Rajya Sabha passed the measure two days after the Lok Sabha did so.

"For the first time, unlawful, undisclosed income abroad has been taxed under this law at a tax rate of 30 percent with an additional 30 percent penalty on it," Jaitley had said replying to the parliamentary debate on the bill.

Explaining that a time-frame will be provided as a "compliance window" for declaring and paying penalty, Jaitley said that failure to meet the compliance timeline will attract an additional penalty of 90 percent for a total tax liability of 120 percent on the quantum of black money abroad.

The finance minister earlier this month warned corporates not to take unfair advantage of the liberalised tax environment.

"I think, for every assessee, every person in the commercial business also, it is a judgement call that in a liberal economic environment of reasonable and lower taxation rates, 'go straight'," he said at the foundation day celebrations of the Enforcement Directorate.

"And, therefore, if you transact within the limits of law, it is much safer. If you breach it, gone are the days where offences would go undetected," he added.

Admitting that there was no official estimation of black money within India or stashed away abroad, Jaitley also told parliament this month that the government was examining the reports of three institutes on the matter.

An unofficial estimate puts the illegal money stashed away overseas somewhere between $466 billion and $1.4 trillion.