The Income Tax Department permits signing of electronic documents using digital signatures. Circular 2/2007, dated 21/5/2007, states that TDS certificates can be certified with digital certificates.
According to provisions of section 203 of the Income Tax Act, 1961, every person responsible for deduction of tax at source shall furnish a certificate of deduction of tax at source. Form 16. 2. is used for this purpose.
Many companies have a large number of employees. Issuing certificates of deduction of tax at source with manual signatures becomes a time-consuming and inefficient process. The IT Department allows the employers to use their registered digital signatures to authenticate TDS certificates instead of using manual signatures. Digital signing of form 16 works well in these cases.
The TDS certificates are now being issued for the purpose of personal record of the deductees. They may be required to produce the certificates on demand before the Assessing Officer according to the section 139C, of the Finance Act, 2007.
A digital signature, also referred to an electronic signature, helps authenticate the identity of the sender. The receiver can verify the sender’s identity. It is crucial for users who transmit confidential messages and documents via the internet. The signatures also ensure that the original message or document hasn’t been tampered with, during transmission. A digital signature can be used to sign any message or document. It doesn’t necessarily have to be encrypted.
Online form signing solution:
- Saves time.
- Makes the process efficient.
- Reduces processing time
Companies have to buy digital signature certificates (DSC) from a third party vendor. An authorised certifying authority or registration authority can issue valid digital certificates. For digital signing of form 16, a class 2 digital signature certificate can be used. Class 3 digital signature certificates can also be used for digital signing of form 16. TCS issues digital certificates and it is the largest certifying authority in India.The certificate is stored in a CD or a hard disk. The DSC has to be installed on the user’s computer in the PFX format.
Steps to install digital signature certificates on the computer:
- Select the ‘PFX’ file and choose ‘Install PFX’ option.
- On the ‘Certificate import wizard’ choose ‘Next’ and follow the steps to import the certificate.
- During the installation, the user has to type the password allotted with the certificate.
- Next choose the option ‘Automatically select the certificate store based on the type of the certificate’. Once the store is selected click on ‘Finish’.
- Setting the security level is a browser-specific feature. After these steps the import will be successful.
The security features ensure that the electronic signatures
- Cannot be duplicated.
- Will be stamped with the time of signing.
- The signatures ensure that the sender cannot disown the message/ documents sent by him/her.
- The digital certificate also contains the digital signature of the authority which has issued the certificate. With this feature, even the authenticity of the certificate can be verified.