E signatures - Applicability, Requirements and Stamp Duty Payable

In our country, e-signatures are valid for around 20 years now and they have attained this status from the Information Technology Act 2000 that conceded e-signatures the equal legal status like handwritten signatures.

Meaning of E-Signature

Better understood as Electronic Signature, it means an electronic way of getting an approval, consent or endorsement on documents. These documents are in electronic form and some of them have even replaced hand written documents at some stages. These E signatures are created with huge amount of security and the signatory has sole control over the private key used in these signatures.
The process to generate and identify the Digital Signature is through unvarying and harmonised outlines such as the Digital Signature Algorithm (DSA) or is in compliance to the XAdES, PAdES or CAdES standards. It uses electronic forms of processing or attesting the identity of the person. This is done by using biometrics or biologically distinguishing traits of an individual. Eg: fingerprints, finger lengths and palm size, iris patterns, or even retinal patterns. The accumulation of this data is done using electronic devices.

In the year 1996 the UNCITRAL Model law on Electronic Commerce was published for the first time by the United Nations. Later, the UNCITRAL model dealing with electronic signatures under article 9, paragraph 3 of the United Nations Convention on the Use of Electronic Communications in International Contracts, 2005, clearly spelt out a mechanism for managing correspondence between electronic and handwritten signatures Internationally alongwith cross-border recognition.

In our country, e-signatures are valid for around 20 years now and they have attained this status from the Information Technology Act 2000 that conceded e-signatures the equal legal status like handwritten signatures. E signatures act as a proof of signature and can assume to be electronic agreements under the Indian Evidence (Amendment) Act, 1882. Digital signatures can be legally admitted as evidence in court. A person intending to use E-Signature can send by electronic means signed documents to their business Associates/partners, investors, and other shareholders thereby intending to communicate important official information. Digital signatures are applicable, to even ratifying and acquisition of business deals and signing proposals. In addition to the above we use digital signatures for Income Tax filing, GST Filing and ROC filing.

The IT Act 2000 recognises 2 types of E signatures:-
(1)  The E-signatures that synchronise Aadhaar with eKYC service: Any User with an Aadhaar ID and the unique identification number issued by the Indian government can use an online e-signature service to securely sign documents online. The online e-signature service amalgamates with an ASP (Application Service Provider) to provide users with a mobile or web app space so that they can interact.

(2)  E- signatures generated with asymmetric crypto-system and hash function: The first type of function secures a pair of keys viz a private key and a public key. Both the type of keys are exclusive and matchless to each user and is used to verify and draw up an e-signature. A digital certificate is obtained, and includes the name, public key and the expiration of the Certificate. There is a possibility that a USB token be issued, having the digital-certificate-based ID, a personal PIN to help sign a document.
Requirements for a Digital Signature:
(1) For Indian Nationals to procure a Digital certificate we require the following documents for Personal identity proof:
  • Passport of the Applicant
  • PAN Card of the Applicant
  • Driving Licence
  • Post Office ID Card
  • Bank Account Passbook with the photograph of the Applicant and signed him/her with attestation from the bank.
  • Photo ID card issued by the Ministry of Home Affairs and Government-issued photo ID with the signatures of the individual
In addition to the above for Address proof, we would require the following:
  • AADHAAR Card of the Applicant
  • Voter ID Card of the Applicant
  • Electric and Water bill not older than 3 months.
  • Driving Licence (DL)/Registration Certificate (RC)
  • Most recent Bank Statements attested by the bank
  • GST registration certificate
  • Property Tax Municipal Corporation Receipt
(2) The Documents Required for Foreign Nationals to procure a Digital Signature are as under:
  • Verified and Attested copy of Applicant’s Passport
  • Verified and Attested copy of VISA of the Country to which Applicant belongs.
  • If from another country and residing in India an attested and verified copy of Resident Permit certificate alongwith address Proof
  • Attested copy of any other Government issued Address Proof, if no local address proof available.
  • If Applicant is not a citizen of India the identity and address proof should be attested by the Embassy of the Country of origin. But if Country is party to Hague Convention Apostil by country of origin, after Public Notary. On the contrary, if country not party to Hague Convention, Consular attestation by Native Country, after Public Notary.
In India, the Certifying Authority or the CA are eMudra, Digital Signature India, Government Approved Certifying Authorities.
Applicability of Stamp Duty

Under the Maharashtra Stamp Act there is imposition of stamp duty on electronic agreements and they need to be stamped. Maharashtra has imposed stamp duty on any record of a transaction, electronic or otherwise, effected by a trading member through a stock exchange or through an association as defined in Clause (a), Section 2, of the Forward Contracts (Regulation) Act, 1952.

In 2005 through an amendment to the Bombay Stamp Act an explanation was added to the definition of ‘instrument’ clarifying that the term document shall also include electronic records. The Amendment also added an explanation to the definition of ‘execution’, that stated that the term signature/signed shall also include attribution of electronic records as provided under Section 11 of the IT Act. Therefore, a contract in electronic form is also required to be stamped, as chargeable to stamp duty under per Schedule I of the Bombay Stamp Act.

Further, even the Maharashtra E-Registration and E-Filing Rules, 2013 have given precedence to adding electronic signature or biometric thumb print mandatory. Hence, it is giving recognition and legal validity to e-contract and e- signature. Now, even, the Indian Penal Code, the Banker’s Book of Evidence Act 1891 and the Reserve Bank of India Act, 1934 have provisions in relation to such electronic contracts which contain digital signature.
E­commerce and E­contracts have given radical improvements to businesses, management, inter­regional and international trade. However, the governing law in India is still at a burgeoning stage and may have many unanswered questions. The Law framework for technologies needs to be made more efficient and upgraded. This can happen only if, the law makers scrutinise the prevailing and approaching challenges surrounding Digital Signatures. This mode of signature has gained prominence because of the current covid situation as most individuals are unavailable to sign physically. In cases where the E signature has been obtained for official purposes, the same can be either retained by the person for further use after resignation from the organization where he obtained it or the same may be revoked by the Organization.