Company Registration Compliances

Importance of Digital Signature Certificate in Personal and Business Transactions

Digital Signature Certificate

The digital signature is issued for authentication of any electronic record by a subscriber i.e. which typically contains the: owner’s public key by using an electronic method or procedure. It is important to understand the basic concepts relating to digital signature before going into details of provisions relating to a digital signature.

A Digital Signature Certificate (DSC) takes the concept of traditional paper-based signing and turns it into an electronic “fingerprint.”

Key features of Digital Signature Certificate

  1. This Electronic/DSC is the digital equivalent of physical or paper certificates.
  2. The digital signature ensures the authenticity of the owner’s signature; he does not have to submit a physical copy of the return.
  3. A digital signature certificate can be presented electronically in order to prove one’s identity, to access information or services on the internet or to sign documents digitally.

Who issues a Digital Signature Certificate?

The licensed Certifying Authority issues a Digital Signature Certificate. Certifying Authority is a person who has been granted the license to issue a Digital Signature Certificate. (Section 24 of the Indian IT Act 2000)

Key Criteria while issuing a DSC-

Section 36 of the Information Technology Act, provides that while issuing a digital signature certificate, a Certifying Authority shall certify that-

  1. The applicant has complied with the provisions of the Information Technology Act and the rules and regulations made thereunder.
  2. The Certifying Authority shall certify that it has published the DSC or otherwise made it available to such person relying on it and the subscriber has accepted it.
  3. The subscriber of the Digital Signature must hold the private key which is capable of creating a digital signature and also holds the private key corresponding to the public key, listed in the digital signature certificate.
  4. The Private and Public keys of subscriber constitute a functioning key pair.
  5. The information contained in the Digital Signature Certificate is accurate.
  6. The Public key to be listed can be used to verify a digital signature affixed by the private key held by the subscriber.
  7. The Certifying Authority should certify that it has no knowledge of any material fact, if which would have been included in the DSC would adversely affect the reliability of the representations made in clause (a) to (d) of Section 36 of the Information Technology Act.
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Areas where the Digital Signature Certificate is used?

DSC is used for-

  1. Electronic filing of Income tax returns.
  2. Electronic filing for the Company Registration.
  3. Affixing the digital signature by the Chartered Accountants, Company Secretaries, and Cost Accountant.
  4. Electronic filing of Government tender.
  5. Electronic filing for the application of Trademark & Copyright.
  6. The Electronic signing of Agreements and Contracts(Where a digital signature is required).
  7. To sign documents such as MS Word, MS Excel and PDFs.
  8. To send and receive digitally signed and encrypted mails.
  9. To do secure web based transactions or to identify other web based transactions participants.

Classification of Digital Signature Certificate

The digital signature is classified into 3 different classes-

  1. Class I Certificate – The Class I Certificate is issued for both business personnel and private individual use. It confirms that the information provided by the subscriber in the application doesn’t conflict with the information in well recognized consumer database.
  2. Class II Certificate – The Class II Certificate is issued for both business personnel and for private individuals use. It confirms that the information provided by the subscriber in the application does not conflict with the information in a well-recognized consumer database. It is issued for both personal and business purposes. Class II can be used for filing Income tax returns and for incorporation purposes.
  3. Class III Certificate – The Class III Certificate is directly issued by the certifying authority and an applicant needs to present himself or herself in front of registration authority and prove his/her identity as the Class III Certificate are high assurance which are primarily intended for e-commerce applications. It is used in online participation or bidding in e-auctions and online tenders.
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Suspension of Digital Signature Certificate

The Section 37 of the Information Technology Act 2000[1], deals with the suspension of Digital Signature Certificate which provides that the Certifying Authority which has issued a DSC can suspend such certificate on a receipt of a request from the subscriber listed in the DSC or any person duly authorized to act on behalf of that subscriber.

It may be noted that the Certifying authority may suspend the DSC if it is of the opinion that such suspension is in public interest.  However, the suspension of the Digital Signature Certificate shall not be for a period exceeding 15 days unless the subscriber has been given an opportunity of being heard in the manner. The Certifying Authority shall communicate the order of suspension to the subscriber.

Revocation of the Digital Signature Certificate

On a request made by the subscriber or the person authorized by the subscriber, a certifying authority may revoke a Digital Signature Certificate issued by it. Additionally, there are certain conditions in which a DSC may be revoked i.e.-

  • Upon the death of the Subscriber,
  • Upon the dissolution of the firm or winding up of the Company where the subscriber is a firm or a Company.

Further, if the Certifying Authority believes that –

  • The material fact represented in the DSC is false or has been concealed or the requirement of DSC was not satisfied.
  • The certifying authority’s private key or the security system was compromised in a way that materially affects the DSCs reliability.
  • The subscriber has been declared as insolvent or upon the death of the subscriber or where a subscriber is a firm or a company that has been dissolved, wound up or has ceased to exist. 
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It may revoke the DSC.

The authority may revoke the Digital signature certificate and may communicate the same to the subscriber. However, it shall not be revoked unless an opportunity is given to the subscriber of being heard in the matter.

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