Union finance minister Nirmala Sitharaman said goods and services tax is much below the revenue neutral rate.

"Revenue neutral rate has come down from 15.3 percent to 12.2 percent under GST in 2023," Sitharaman said.

The minister also said the government wants to increase its revenue collection, but not before simplifying the compliance burden of taxpayers.

"We need to raise revenue, but simplifying, easing and compliance of taxpayers comes first," the minister said at an event organised by the Revenue Bar Association on September 5.

Sitharaman said the federal structure in GST has to be respected, while denying any friction between Center and states.

Earlier, Moneycontrol had reported that the GST Council is likely to exempt term life insurance policies from GST. However, tax on insurance policies with an investment component will continue, a decision that could boost demand for pure protection policies.

The decision is expected to be formalised in the 54th GST Council meeting on September 9, a senior government official told Moneycontrol.

This decision is anticipated to make term life insurance more affordable, potentially boosting its adoption among Indians.

Moreover, any proposal to exempt health insurance policies from the 18 percent GST could deal a Rs 3,500 crore blow to government revenues annually, a senior official told Moneycontrol.

The Council is also likely to discuss rate rationalisation, taxation of tobacco and related products, and GST on transactions foreign branch offices. The Council is also expected to discuss GST on online gaming companies.