A detailed look at digital signatures or DSC

Computerization of processes has changed many of our day-to-day processes to e-process. Like newspaper is now available as e-newspaper, gifts are now available as e-gifts, cards are now available as e-cards etc. Similarly, even the Income Tax Return filing process has changed to e-filing process.

With the change of paper process to e-process, even the authentication modes of these processes have changed. Earlier, authentication was easier as the person would sign the declaration by self on verification. But with e-process, the signing is also done through the online medium. In cases like Income Tax Returns, it is very important that all correct particulars are stated in the returns and the person furnishing the same submits a declaration that all particulars stated are true and fair to the best of his knowledge.

This is the reason why the government took time to implement the process of ONLINE INCOME TAX RETURN FILING.

So, how is the declaration signed while submitting documents online? This is now answered the technology of Digitally signing the document online using Digital Signature Certificate (DSC). With DSC, the process of Income Tax Return filing can be easily furnished with right authentication.

What is Digital Signature Certificate?

Digital Signature Certificate is a certificate to authenticate the digital message or the document. The availability of the Digital Signature authenticates that the person signing adopts that content.

A Digital Signature Certificate authenticated the electronic document in a similar manner of a handwritten signature that authenticates any printed document. Every individual is allotted a different Digital Signature Certificate which identifies which Digital Signature belongs to whom. The signature cannot be forged as it asserts the name of the person who has digitally signed the document.

The recipient of the message can verify that the message originated from the person whose signature is attached to the document and the message has not been altered since it was signed either intentionally or accidentally. In case of alteration in a message, the signing person can disown the message claiming that the signature was forged.

In simple, Digital Signature Certificate enables authentication and non-repudiation of digital message assuring the recipient of the message of both the identity of the sender and the integrity of the message.

How to apply for Digital Signature Certificate?

Digital Signature Certificate is issued by the certifying authority and the Information Technology Act 2000 grants it the same status as that of a physical signature.

The Digital Signature Certificate is issued with a one year or two year validity. This certificate is issued in the form of USB token.

Vide notification dated 9th July 2010 amending Rule 12, the CBDT has made it mandatory all Companies filing ITR-6 to digitally sign the I-T return for AY 2010-11.

For the complete procedure of DSC registration, read this post. 

In the following scenarios, taxpayers may find it difficult to register the DSC as per the existing procedure as mentioned above:

  • Non-resident companies where the Directors are foreign nationals.
  • Companies where the I-T return is being filed for the first time
  • Companies where the Managing Director has changed and other Directors are either unavailable or also have changed.

In all such cases it is difficult to verify the identity of the person and his relationship with the Entity for which he is the authorized signatory. With a view to making registration simpler in such cases, the procedure has been changed to enable registration of a DSC where the PAN is also provided in the DSC as per the latest Interoperability guidelines issued by the Chief Controller of Certifying Authorities.

As per the guidelines for DSC Interoperability issued by the CCA, the Permanent Account Number (PAN) has been included in an encrypted format of DSC.

At the time of uploading the IT Return of the Company / Firm / Entity PAN, if the DSC is used for signing the I-T Return, the Department verifies the following details:

  1. if the DSC is registered in the portal;
  2. that the unique Sl No of the DSC used to sign the IT Return is the same as the unique Sl No of registered DSC; and,
  3. the PAN number of the Verifier (Authorized Signatory) as mentioned in the Verification portion of the IT Return, is the same as that of the person bearing the registered DSC; or
  4. in case of ITRs 1-4, the Individual logged in is the same as the person bearing the registered DSC.

Only after this verification, the IT Return is permitted to be signed and uploaded.

Digitally signing Income Tax Returns

The IT department allows Digital Signature Certificate(DSC) to authenticate the tax returns. DSC gives the convenience to the assessee to get rid of verifying the ITR by physically posting the ITRV to CPC. Other advantages of filing the ITR through DSC as below:

  • It is a paperless method of filing of ITR.
  • It gives a higher security as the signature cannot be forged.
  • It cannot be misused too, as it is password authenticated.
  • It is mandatory for some class of taxpayers to file the ITR through DSC only.
  • It is not required for a person to be present physically for authenticating the document in case of DSC.

Uses of DSC are as follows:

  • Used to file the income tax return.
  • DSC is also used for registering and verifying PAN online.
  • It is also required for filing TDS statement online.

That brings us to the end of this post. We hope that this was useful.


Process for registration and generation of DSC for e-filing.

Complete procedure of e-filing with digital signature.