As per the IT Act, of 2000, a digital signature has the same status as your normal or regular signature has. For example: a digital signature is used to file income tax returns without any complications in a secure and safer way. If you attach the Digital Signature Certificate (DSC) with the tax return document, then it verifies the identity of the taxpayer and reduces the chances of fraud which could be anytime.
The digital signature certificate is compulsory for professionals and individuals who have an annual gross income of Rs. 25 lakhs or more to file an income tax e-file as per the revised Section 44AB of the Income Tax Act . In this inforamtive article, we shared why individuals, small businesses, and large organisations require DSC certification.
What is a Digital Signature Certificate?
The Digital Signature Certificate (DSC) is an electronic document. This certificate is electronic form of physical certificate. Some examples of this certificate that work as proof of identity for an individual are a Driver’s license, PAN Card or passport.
For instance, a driving license shows that the individual is legally authorized to drive in a particular country. Similarly, a digital certificate is present electronically to prove the identity of a Director to sign documents digitally.
Types of Digital Signature Certificates
The different types of digital signature certificates are as follows:
- Class 1 certificate is issued to individuals and private subscribers. This type of certificate can be used for both private and business purposes. So, it is used for signing low-value or non-commercial transactions where identity proof is not mandatory.
- Class 2 certificate is required for filing the documents through government websites. It is used for incorporation of companies, e-filing of income tax, ROC filing, etc.
- Class 3 certificate is required for participation in an e-auction or e-tender. It is required for filing the company’s annual returns, financial statements or other incorporation documents. However, it is also required in filing TDS returns.
Advantages of Digital Signature Certificate
The physical documents are signed manually, but the electronic documents require a digital signature that is used to sign documents electronically. For example, e-forms or e-contracts must be signed electronically. For this, the Digital Signature Certificate is required. However, the DSC has other advantages as well and these are as follows:
- Document Security: The documents that are signed electronically have created a seal which is impossible to alter without the permission of the owner of the doc. However, this helps in maintaining the authenticity of the doc. Signs linked with papers prove your identity as a signer and prevent any claims of denial or forgery.
- Reduce Paperwork: If you have a DSC then there is no need for physical signatures or courier services. It helps in paperless transactions and saves time, money and resources. Also, it saves the cost of printing, courier, and storage of necessary documents.
- Accepted by Government: The Indian government agencies mostly take the documents that are digitally signed documents for different applications and services. So, with the help of DSC, the process of documentation becomes seamless.
- Accessibility: You can use your DSC from anywhere with the help of an internet connection. So, you can sign important documents from anywhere in the world without the geographical limitations.
- Contractual Validity: The contracts that are signed by digital signature have legal validity in India, as it makes them a secure and convenient way to traditional paper agreements. However, this increases the transparency in transactions and helps the business to comply with the data privacy regulations.
Who Required Digital Signature Certificate?
The following entities are required a Digital Signature Certificate (DSC) in India:
- Company and LLPs: According to the Indian Companies Act 2013, all companies and LLPs must obtain a DSC to file electronic forms, returns, and documents with the Ministry of Corporate Affairs (MCA).
- Directors: The director of a company in India must obtain a digital signature certificate to sign the electronic documents. The director must obtain a DSC.
- Income Taxpayers: It becomes mandatory for some individuals and companies to file e-filing through DSC on the ITR portal. So, it is necessary to obtain to file the income tax returns.
- Trademark and Patent Applicants: The individuals and businesses required digital signatures to apply for trademarks and patents with the Intellectual Property India (IPI).
- Government Officials: Government officials who deal with confidential information must use digital signatures to sign electronic documents.
- IEC Certificate Holders: The individuals who have an Import-Export Certificate or want to apply for one are required to obtain a unique Digital Signature Certificate.
- Foreign Individuals and Organisations: The Class 3 certificate is for foreign Individuals and organisations such as NRI, persons residing outside India, small or large companies, enterprises, and other public & private organisations.
Process for Applying for DSC
- Applicants who want to obtain a Digital Signature Certificate (DSC) can directly approach Certifying Authorities (CAs). The original supporting documents and self-attested copies are required for application.
- The DSCs can also be obtained by CA, using Aadhar eKYC-based authentication. The supporting documents are not required in this case.
- If the applicant has a letter or certificate issued by a Bank containing their information as retained in the Bank database, it may be accepted. However, the letter or certificate must be certified by the Bank Manager.
Conclusion
The requirement to obtain a Digital Signature Certificate depends on the type of entity and their use of the certificate. However, the sign is used to receive or send digitally signed emails, file income tax returns, conduct secure transactions online or sign documents like MS Word, MS Excel, PDF, etc.