Squeeze parallel economy in a fair manner: FM to taxmen

New Delhi: Finance Minister Arun Jaitley today asked taxmen to squeeze the parallel economy but gave an assurance that while doing so honest taxpayers may have nothing to fear about the new black money law.

Finance Minister Arun Jaitley addressing top taxmen
Finance Minister Arun Jaitley addressing top taxmen in New Delhi on May 25, 2015.

“The parallel economy has to be squeezed…and (it) has to be done in very fair manner, not in a harsh manner. In doing so, as senior officers you have to… maintain the highest standard of integrity,” he said while 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’s targeted only against those who have stashed assets abroad.”

The minister further told the tax officers, “Every well meaning advisor will tell you, tax base has to be expanded.

Black money has to be squeezed out and at the same time if you take steps to do that, you have to listen to the taunt of draconian steps which are being taken.”

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.

“Black money has to be squeezed”, he said, adding only those who have defied the system in the past and intend to defy the compliance window to come clean have to worry.

Jaitley further said that improvement in tax collection will increase the ability of the government to step up spending on social and infrastructure projects and provide relief to individual taxpayers.

For the current financial year, the minister said, direct tax collection was likely to improve by 14-15 per cent and there was possibility of government improving upon the fiscal deficit target of 3.9 per cent.

However, he added that the government would prefer to increase expenditure on social sector schemes instead of improving its fiscal deficit target.