Option premium defined as the purchaser's upfront payment on buying an option in securities under STT rules.

Definition of Option Premium: under section 97(8) of Chapter VII (Securities Transaction Tax) of the Finance (No. 2) Act, 2004, Option Premium denotes the amount payable by the purchaser of an option in securities at the time the option is bought. The provision treats that upfront payment as the taxable consideration for the transaction subject to the Securities Transaction Tax framework, identifying the purchaser's payment obligation and the precise timing-at purchase-as constitutive elements of the defined term.

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