No More Class 2 Digital Signature from 2021?

Digital Signature Certificate (DSC) is used to sign the documents submitted in electronic form. The Information Technology Act, 2000 provides for using digital signatures on documents filed electronically for ensuring security and authenticity of the documents. Digital Signatures are affixed on all the documents filed on the Ministry of Corporate Affairs (MCA) portal by the authorised persons who have a DSC to sign the documents.

DSC helps to prove one’s identity, sign certain digital documents, or access information or services on the Internet. Online transactions such as Incorporation of company or LLP, Income Tax e-filing is validated using DSC.

The Controller of Certifying Authority (CCA) has appointed Certifying Authority (CA) for issuing DSC. CA has the licence to issue Class 2 or 3 DSC under Section 24 of the Information Technology Act, 2000. The list of licensed CAs which can issue DSC is provided on the CCA website.

Class 2 and Class 3 DSC

DSC Class 2: DSC Class 2 is used for filing documents to the Registrar of Companies, Income Tax Return, MCA forms, audit reports, etc. In Class 2 DSC, the identity of a person is verified against a trusted and pre-verified database. It is issued for both business and private individuals use.

DSC Class 3: DSC Class 3 is the highest level of DSC where a Registration Authority verifies the identity of a person. DSC Class 3 is used for e-tendering, which is an online conducted procurement. It is applied in an environment where there are significant fraud risks, threats to data or high-value transactions.

CCA Guidelines

The CCA issued guidelines for the CA’s regarding the issuance of DSC on 26th November 2020. The guidelines contain a provision which states that Class 2 DSC is discontinued from 1st January 2021. They state that the CA’s shall not issue Class 2 DSC alone but will issue Class 3 DSC which will be a combination of Class 2 and Class 3 DSC. Class 3 DSC will be qualified as both Class 2 and Class 3 DSC.

CA’s will issue Class 3 DSC for both organisations and individuals from 1st January 2021. Thus, from 01.01.2021, Class 3 DSC will be used for filing income tax returns, documents on MCA portal, audit reports, PF, etc. The guidance also provides other information related to the security of digital documents, guidelines for maintaining e-KYC, SSL certificate for websites, etc.

Validity Of Class 2 DSC

Usually, DSC which are issued is valid for a period of one or two years. They are renewable on the expiry of the validity period. Since the issuance of the guidelines, Class 2 DSC cannot be renewed after 1st January 2021. In case, they are renewed before 1st January 2021, they will be valid and can be used till its expiry period but cannot be renewed further.

Effect of CCA Guidelines

With the guidelines of CCA, Class 2 issuance is discontinued. No person/organisation will be able to purchase or renew Class 2 DSC after 01.01.2021. Only Class 3 DSC can be obtained for signing digital documents.
Class 2 DSC can still be used till its expiry date as CAA has terminated only new issuance or renewal after 1st January 2021. Class 2 DSC will be automatically converted into Class 3 DSC without any manual work. All Class 2 DSC pending for email, video, and phone verification will be rejected after 1st January 2021.

The Class 3 DSC is expensive as compared to Class 2 DSC. But, Class 3 DSC have higher safeguards and deal with security risks much better than Class 2 DSC. Thus, the users will obtain an upgrade in protection when they get Class 3 DSC.

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