Fundamentals of Business Laws and Business Communication · E-Contracts and E-Signature - Meanings and Requirements

Licence to Issue Electronic Signature Certificates (Section 21)

Updated 10 October 2026 · Fact-checked

Under Section 21 of the IT Act, 2000, any person may apply to the Controller for a licence to issue electronic signature certificates. The licence is granted only if the applicant meets prescribed requirements. It is valid for a prescribed period, cannot be transferred or inherited, and carries conditions. A licensed person is a Certifying Authority.

Understand Licence and Certificates for Electronic Signatures

An electronic signature certificate is a record that links a signature to a named person. It lets others trust that an electronic document really came from that person. But a certificate is only as trustworthy as the body that issues it. So the law does not let just anyone issue one.

The IT Act, 2000 solves this through licensing. A person who wants to issue electronic signature certificates must get a licence from the Controller of Certifying Authorities. A person who holds such a licence is called a Certifying Authority. In plain words, a Certifying Authority is a licensed issuer of electronic signature certificates.

Section 21 is the section on this licence. It says any person may apply to the Controller. It then adds a filter: the licence will not be issued unless the applicant meets the requirements set by the Central Government. These cover qualification, expertise, manpower, financial resources and other infrastructure needed to do the work safely.

The section also fixes the nature of the licence. It is valid only for a period prescribed by the Central Government. It is not transferable or heritable, so the holder cannot sell it or pass it on to heirs. And it is subject to terms and conditions specified in the regulations.

For your exam, think of it as three questions: who applies (any person), to whom (the Controller), and on what terms (prescribed requirements, limited validity, no transfer, conditions). Questions are usually direct statements to mark true or false.

Key formulas to remember

Who may apply: Any person → applies to the Controller → for a licence to issue electronic signature certificates; Section 21(1). The applicant need not be a company or government body; the Act says any person, subject to the requirements.
Condition for grant: No licence unless applicant meets prescribed requirements; Section 21(2). Requirements cover qualification, expertise, manpower, financial resources and other infrastructure, as prescribed by the Central Government.
Nature of the licence: Valid for a prescribed period + not transferable or heritable + subject to terms and conditions; Section 21(3). Remember it as: limited time, personal to the holder, conditional.
Certifying Authority: Certifying Authority = person holding a licence to issue electronic signature certificates; Without a licence, a person is not a Certifying Authority under the Act.

How to solve Licence and Certificates for Electronic Signatures questions

Most questions on this topic test one detail of the licence or the meaning of a Certifying Authority. Use this method.

1Read the statement and find the key word: licence, Controller, Certifying Authority, validity, transfer or requirements.
2Recall the three parts of Section 21: application to the Controller, prescribed requirements, and the nature of the licence.
3If the option says the licence can be sold, gifted or inherited, reject it. The licence is not transferable or heritable.
4If the option says a licence is granted automatically or without conditions, reject it. Requirements must be met first.
5If the option names the wrong authority (for example, a court or the RBI) as the one to apply to, reject it. The application goes to the Controller.
6If the option says the licence is valid forever, reject it. Validity is for a prescribed period.
7Pick the option that matches the rule word for word in meaning, and check that no other option also fits.

Quickest way: Three-point licence check

When to use it: Use it for any true/false or 'which is correct' MCQ on licensing of Certifying Authorities.

Remember the three tags: Apply to Controller, Meet requirements, Not transferable or heritable.
Scan the options for any that break a tag. Strike them out at once.
Watch for absolute words such as 'always', 'automatically' and 'permanent'. They are usually wrong here.
Choose the remaining option. If two remain, prefer the one that also matches the Certifying Authority meaning.

Common mistakes in Licence and Certificates for Electronic Signatures

Thinking the licence can be transferred to a buyer or inherited by legal heirs.
Students compare it with ordinary property or a business, which can be sold or inherited.
Fix: Recall that Section 21 says the licence is not transferable or heritable. It is personal to the holder.
Believing the licence is granted to anyone who applies.
The words 'any person may apply' are read as 'any person gets it'.
Fix: Applying is open to any person, but the licence is issued only if the prescribed requirements are met.
Saying the licence is valid for life or for an unlimited period.
Students forget that a licence is a permission with a time limit.
Fix: The licence is valid for a period prescribed by the Central Government.
Naming the wrong authority for the application, such as a court or a bank regulator.
Students mix up the Controller with other regulators they have studied.
Fix: Link the licence with the Controller. The application is made to the Controller.
Defining a Certifying Authority as anyone who signs electronically.
The word 'authority' sounds like a general signer or approver.
Fix: A Certifying Authority is a person licensed to issue electronic signature certificates. It issues them; it does not just sign.
Forgetting that the licence carries terms and conditions.
Students remember only the first two rules of the section.
Fix: Add the third point: the licence is subject to terms and conditions specified in the regulations.

Worked examples

Example 1

Which of the following is correct about a licence to issue electronic signature certificates under Section 21 of the IT Act, 2000?
(a) It is freely transferable to any other person
(b) It is granted only if the applicant meets the prescribed requirements
(c) It is valid for an unlimited period
(d) It is granted without any terms and conditions

Show the solution

Recall Section 21(2): no licence is issued unless the applicant fulfils the prescribed requirements.
Check (a): the licence is not transferable or heritable, so (a) is wrong.
Check (c): validity is for a prescribed period, so (c) is wrong.
Check (d): the licence is subject to terms and conditions in the regulations, so (d) is wrong.
Option (b) matches the rule.

Answer: (b) It is granted only if the applicant meets the prescribed requirements

Example 2

Under the IT Act, 2000, a person who has been granted a licence to issue electronic signature certificates is called:
(a) Controller
(b) Subscriber
(c) Certifying Authority
(d) Intermediary

Show the solution

Identify what is described: a person holding a licence to issue electronic signature certificates.
The Controller is the official who grants and supervises the licence, not the holder. So (a) is wrong.
A subscriber is the person in whose name the certificate is issued, not the issuer. So (b) is wrong.
An intermediary handles electronic records for others, such as a service provider. It is not the licensed issuer. So (d) is wrong.
The licensed issuer is the Certifying Authority.

Answer: (c) Certifying Authority

Exam tips

Expect direct statement questions. Learn the three tags: apply to Controller, meet requirements, not transferable or heritable.
Treat options with 'automatically', 'permanent' or 'freely transferable' with suspicion.
Keep the roles apart: the Controller grants the licence, the Certifying Authority holds it and issues certificates, and the subscriber receives a certificate.
Quote Section 21 only for the licence. Do not attach it to other topics such as the legal validity of electronic signatures.
If unsure, eliminate options that break any one rule of the licence. There is no negative marking, so always attempt the question.

Practice questions from E-Contracts and E-Signature - Meanings and Requirements

Licence and Certificates for Electronic Signatures: frequently asked questions

What does Section 21 of the IT Act, 2000 deal with?

It deals with the licence to issue electronic signature certificates. Any person may apply to the Controller, but the licence is granted only if prescribed requirements are met. It is valid for a prescribed period, is not transferable or heritable, and has conditions attached.

What is a Certifying Authority under the IT Act?

A Certifying Authority is a person who has been granted a licence to issue electronic signature certificates. It is the trusted body that issues the certificate linking a signature to a person. Without the licence, a person cannot act as one under the Act.

Who can issue a digital signature certificate in India?

Only a licensed Certifying Authority can issue it under the IT Act. The licence comes from the Controller after the applicant meets the prescribed requirements. For the exam, remember that an unlicensed person cannot issue certificates under the Act.

Can a Certifying Authority sell or pass its licence to someone else?

No. Section 21 says the licence is not transferable or heritable. It stays personal to the person to whom it was granted.