Digital Signature to E-File Income Tax Return

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Why Should one Use Digital Signature to E-File Tax Return?

The advancement of technology is seen everywhere, from e-ticking to e-filing the tax return, everything can be done easily at the comfort of your home. However, while filing an income tax return online one requirement that you have to furnish is to affix your digital signature with your tax return documents to authenticate these docs.

A digital signature is an electronic signature that is used to verify the electronic documents of an individual. For example, a digital signature enables you to file your income tax return without any complications and in a more safe way.

As per the IT Act, 2000, a digital signature has the same status as your regular or normal signature has. It is used to attest your tax return documents and verifies them without any chances of fraud.

The requirement of Digital Signature

According to the revised Section 44AB of the Income Tax Act, it is compulsory for a professional and individual having an annual gross income of 25 lakhs Rs. and more to income tax e-file. The business people with Rs.1 Crore and above annual turnover are needed to file ITR online.

How to Get Digital Signature

To get a digital signature you require a Digital Signature Certificate (DSC) released by the Certifying Authorities (CAs) sanctioned by the Controller of Certifying Authorities (CCA) of Indian Government. There are approximately 10 Digital Signature Certificate certifying authorities available in India. Some of them are – NSDL, eMadhura. Tata Consultancy Services (TCS), Capricorn, National Informatics Center (NIC), and a few more.

The DSC comes as USB token and most of the times have a validity of one to two years. You can renew your digital signature upon expiry and DSC’s pricing also includes USB cost (one-time), DSC issuance cost, and the renewal cost after the expiration of validity. There is no fixed cost for DSC issuance and it is driven across the market to all the certifying authorities.

Classes of DSC

There are three classes of DSCs – Class 1, Class 2, and Class 3.

  • Class 1 DSC: It is issued to an individual or private-subscribers to offer the assurance of the lowest level. Class 1 DSC can be used for both private and business use. Basically, it is used for digitally signing the low-value or non-commercial transactions wherein identity proof is not necessary.
  • Class 2 DSC: This kind of DSC is required for filing the documents electronically through different government authorities such as the Ministry of Corporate Affairs, Income Tax Department, etc. In this way, it is used for incorporation of companies, e-filing of income tax, ROC filing, etc.
  • Class 3 DSC: This type of DSC is used for participation in e-auction or e-tender. Different government entities such as Banks, Railways, Road Transport Authorities, etc. need Class 3 Digital Signature Certificate for participation in e-auctions.

Advantages of Having Digital Signature

Mentioned below are some advantages of having a digital signature: 

  • It cannot be tempered or edited.
  • It is an environment-friendly option and does not waste paper.
  • Documents that are digitally signed can easily be tracked.
  • With this, you are not required to verify the return by using an OTP that is Aadhar-based or send ITR – V’s signed hard copy to the CPC department Bangalore.

In this way, the biggest advantage to use a digital signature at the time of e-filing the income tax is absolute privacy of your transactions that are online. The certificates can be used to encrypt all the information that can be read by the designated recipient only.

Where Do We Use Digital Signature?

Digital signatures most of the times are used in the below-mentioned cases:

  • To receive or send digitally signed emails.
  • To e-file income tax return.
  • To conduct secure transactions online.
  • To sign documents like MS Word, MS Excel, and PDFs.

Different Elements of Digital Signature

To understand the intent of the digital signature, it is a must to know the elements of the digital signature:

  • Name: The most important part of a digital signature is person’s name who is going to use the digital signature or who is going to authorize the documents used for different purposes such as income tax e-filing with the Income Tax Return department.
  • Serial Number: Another important component of a digital signature is its ‘serial number’. It is a unique number for ensuring the viability of the digital signature. The certifying authority uses this number for issuing the digital certificate.
  • Public Key: All the digital signatures have a specific public key linked with it which is used to encrypt and secure one document at the time of its authorization. This key plays a crucial role in the digital signature's verification process. The expiry date of the digital signature is determined through the associated public key. Basically, this key has a time frame for which the digital signature is effective. If the requirement arrives, this key as well is used to reset the digital signature.
  • Personal Information: With the name, the digital signature as well contains some vital information such as contact number (most of the times it is a mobile number), office or resident telephone numbers, residential address, email address, and office address for locating and contacting the person. All this information is given in the encrypted form and is not accessible by everybody and hence maintains the privacy of the person (user).

Steps to Register the Digital Signature When E-Filing the ITR

  • Step 1: Register on the portal of the Income Tax Department, which is for e-filing and has a URL as ‘www.incometaxindiaefiling.gov.in’.
  • Step 2: At the website of e-filing, log in on the registered account with the help of relevant password and user id.
  • Step 3: After you are logged in, go to the button with the name ‘My Account’ and click option ‘Update Digital Certificate’.
  • Step 4: File download process with the name of ‘Store Certificate’ must start automatically. Digital signature’s copy is locally saved on your computer.
  • Step 5: Now you are required to go to the webpage again and then click ‘Upload your USB Token’. Doing this redirects you to the next page that has a button that asks to select the USB Token Certificate and then click ‘Browse’. Clicking this button opens a window where you have to select a file that you have downloaded.
  • Step 6: Select this file then click ‘Okay’. After this provide the ‘PIN code’ which is the password of the Token and after that click ‘Sign’.

List of Digital Signature Certifying Authorities

Mentioned below is the list of digital signature certifying authorities:

  1. Safescrypt
  2. IDRBT
  3. Capricorn CA
  4. CDAC CA
  5. e Madhura CA
  6. Code Solutions CA
  7. Tata Consultancy Services
  8. NSDL
  9. National Informatics Center

Steps to Perform Online Upload of Income Tax Return with Digital Signature

  • Step 1: Fill the form for ITR and generate the XML and keep it.
  • Step 2: Go to the website of Income Tax India and log in with your account (registered) by using your Password and User Id for the same.
  • Step 3: After successful login, select the tab that says ‘Submit Return' and then choose the ‘Assessment Year'.
  • Step 4: From the drop-down menu, select the Income Tax return Form Name.
  • Step 5: The field that asks whether you want the file to be digitally signed, select ‘Yes’.
  • Step 6: Choose the type of digital signature that you want to use. This may be ‘Sign with USB Token’ or ‘Sign with.PFX file'.
  • Step 7: Upload the ‘Income Tax Return’ by using the ‘Digital Signature Certificate’ and authenticate this.

Tax Payers Who Should E-File through Digital Signature

Taxpayer Type

Condition

Income Tax Return Furnishing Manner

HUF or Individual

All the accounts should be audited as per the Income Tax Act's Section 44AB.

Electronically by using a digital signature

Any person who is required to fulfill the ITR in Form ITR-7

In the situation of a political party.

Electronically by using a digital signature

Company

In all the cases

Electronically by using a digital signature

LLP or Firm or any person (except the persons specified in Sl. No. One to Three in this table) who is needed to file the return in Form number ITR – 5

All the accounts should be audited according to the Income Tax Act's Section 44AB.

Electronically by using a digital signature

FAQs on Digital Signature to E-File Income Tax Return

Question 1: Is it possible to misuse digital signature?

Answer: It is very unlikely to use digital signature especially when you use it at the right platform.

Question 2: What is the process to get a digital signature?

Answer: Fill the application form, attach all the required documents, and submit these documents to the signing authority.

Question 3: When is the digital signature needed for income tax return?

Answer: Digital signature is needed for the entities whose account must be audited in Income Tax’s Section 44AB.

Question 4: How to apply a digital signature?

Answer: You need to follow the below steps to apply a digital signature:

  • Go to the website of any of the certifying authority and select the type of entity you are.
  • Enter all the required information
  • Submit all the necessary documents.
  • Make payment for the certificate of the digital signature.

Question 5: What is the requirement of a digital signature?

Answer: Same as physical documents that are needed to be signed manually, electronic documents should also be signed digitally, which can be performed with the help of digital signature.

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