The use of electronic signatures in electronic contracts is on the rise in India, due in part to the government’s Digital India initiative which focuses on enhancing digital infrastructure and on transforming India into a paperless economy. Companies doing business in India are also increasingly utilizing electronic signatures to complete their transactions.
In India, electronic and certificate-based digital signatures are regulated by the Information Technology Act, 2000 (IT Act) and the following rules made under this Act:
Information Technology Act, 2000 (IT ACT)
The IT Act distinguishes between electronic signatures and certificate-based digital signatures, but both have the same status as handwritten signatures under Indian law. Digital signatures, which are considered a subset of electronic signatures, use an asymmetric crypto system and hash function. They are preferred for certain government transactions such as e-filing with the Ministry of Corporate Affairs, and goods and service tax filings.
Valid electronic signatures must include an electronic authentication technique or procedure specified in the Second Schedule of the IT Act. The Second Schedule currently specifies the following e-KYC (Know Your Customer) authentication techniques and procedures:
- Aadhaar e-KYC
- Other e-KYC using Permanent Account Number (PAN)).
Under Indian law, reliable electronic and digital signatures carry a presumption of validity compared to other non-recognized electronic signatures. However, in common with other jurisdictions, Indian law will not consider an agreement invalid solely on the grounds that it was formed with such non-recognised electronic signatures.
Essential requirements to valid e-signatures under the IT Act:
- It must be unique to the signatory;
- at the time of signing, the signatory must have control over the data used to generate the electronic signature;
- any alteration to the affixed electronic signature, or to the document to which the signature is affixed, must be detectable;
- there should be an audit trail of steps taken during the signing process; and
- The signer certificates must be issued by a certifying authority (CA) recognized by the Controller of Certifying Authorities appointed under the IT Act.
GOVERNMENT USES OF ELECTRONIC SIGNATURES
The IT Act allows the use of an electronic or digital signature for (i) filing any form, application or document with any government authority; (ii) issue of any license, permit or approval by the government authority; and (iii) receipt or payment of money in a particular manner, in electronic form. The government authority may create rules prescribing the manner in which electronic records and electronic signatures are accepted for these purposes. For instance, Rule 7 of the Companies (Registration Offices and Fees) Rules, 2014 specifies that every application, financial statement, prospectus, return, declaration, memorandum, articles, particulars of charges, or any other particulars or document or any notice, shall be filed in computer readable electronic form in pdf. Further, Rule 8 stipulates that an e-form must be authenticated using Digital Signature; and the Central Board of Direct Taxes have notified procedure for filing e-TDS/ e-TCS and other forms using digital signatures.
In addition, certain government authorities have initiated e-filing regimes and permit electronic signatures for the following purposes:
- Digital locker self-attestation;
- Goods and sales tax returns and invoices;
- Account opening in banks and post offices;
- Application for driving license renewal and vehicle registration;
- Application for birth, caste, marriage and income certificate etc.;
- Passport application for issuance or reissue/renewal;
- Telecom application for new connection.
Prashant Tyagi (INTERN)
LEXIS & COMPANY