Signing the electronic way

Inder Karnik was ecstatic when he filed his income tax return (ITR) electronically, as it helped him save time. But he also had to submit a physical copy of the ITR papers. Reason: He used a scanned copy of his signature instead of a digital one.

Many people, like Karnik, confuse a digital signature with an e-signature. An e-signature is a scanned image of your physical signature. A document with a digital signature will simply state that it has been digitally signed by (name of the person). When you click on this link, you get the details of the signatory. These include name, public key, date of expiry, issuer’s name, the serial number of the digital signature and the digital signature.

A digital signature is the only way one can authenticate electronic or online transactions legally — for example, while using e-commerce websites and other transactional portals, internet banking, broking and other online transactions like e-filing of returns. You can even encrypt information in your e-mail using a private key.

How does it work
A digital signature certificate has to be purchased from a government-approved certification agency. At present, there are seven such agencies, including companies like Informatics Centre, 3i Infotech, MTNL and Tata Consultancy Services.

Customers are given two codes for verification —private and public keys.

A digital signature is produced using a special algorithm and a private key. When digital signature is used, it is verified by a signature verifying the algorithm, the public key and the signature.

Limitations
“At present, use of digital signatures is limited to certain transactions or when mandated by the government,” says P S Nagaraju, director, etaxmentor.com.

Though the Indian Information Technology Act allows a digital signature to replace the physical one, there are certain limitations. For instance, a digital signature may be used for signing a property deed in an electronic form. But a physical copy of the deed is mandatory, as it needs to be stamped by the registrar’s office. The Indian Evidence Act calls for physical signatures to authenticate such transactions and documents as property deeds.

Cost and validity
However, digital signatures also come with a validity period of one-two years, implying there is a cost attached/ There are extra costs if the same is loaded on a USB drive (mentioned as a token) or mailed through a link.

Typically, for a one-year period, you will have to shell out Rs 500-600, but will only be able to use it to sign your e-mails digitally. If it authenticates your identity for sensitive transactions like e-filing of returns or internet banking & broking, the costs are between Rs 2,200 (without token) and Rs 3,200 (with token). There is an additional one-time charge for the USB drive.

However, costs are expected to come down as “a lot of agencies have now started issuing digital certificates with a validity period of one-three months to individuals. This is helpful when you need the signature for a single transaction like e-filing of returns,” says P S Nagaraju, director, etaxmentor.com.

Caution
While the USP (unique selling point) of a digital signature is believed to be security, it allows one while conducting even the most confidential transactions. Ironically, this is also one of the biggest deterrent to its use. A digital signature can be mis-used a lot more, as it can be used for several transactions with equal accuracy each time.

Anil Harish, partner, D M Harish and Co, Advocates, explains, “If a physical signature is mis-used, you may seek legal recourse citing forgery. In case of digital signature being mis-used, it is difficult to prove this legally”.