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What Is the Information Technology Act?

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  • Written By: Nicholas K.
  • Edited By: R. Halprin
  • Last Modified Date: 23 August 2014
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The Information Technology Act of 2000 was enacted by the Indian parliament to update the nation’s approach to online transactions. This legislation brought India into agreement with a United Nations (UN) resolution passed in 1997 called the Model Law on Electronic Commerce. A major provision of the Information Technology Act is the legalization of digital signatures on a majority of commercial agreements and contracts. The Indian parliament also created mechanisms to prevent identity theft and fraud during digital transactions. An amendment in 2008 added stricter punishments for businesses that fail to provide adequate security for a consumer’s identity.

The Model Law on Electronic Commerce of 1997 was the template for India’s Information Technology Act of 2000. This UN measure stated that roadblocks to online commerce include the lack of provisions in national law for digital signatures and online contracts. The UN General Assembly instructed member nations that passage of laws to remedy these issues would ease the transition to electronic commerce. Indian legislators took up debate over the Model Law in early 2000 with final passage of the Information Technology Act on October 17, 2000.

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Digital signatures on tax returns, government contracts, and consumer agreements were made legal with the Information Technology Act. Every business or agency accepting digital signatures must use software to create public keys and private keys. The signatory to an agreement must enter a full name or public key before the name is scrambled to create a private key. These two keys must be matched by the recipient of the contract to ensure the signer’s identity. The Indian parliament prohibited digital signatures on trusts and wills because these documents require witnesses prior to filing.

Another element of the Information Technology Act of 2000 was the creation of government bodies to anticipate new challenges to the law. The Cyber Regulations Advisory Committee is made up of public and private officials who consult with the government about the law’s effect on electronic commerce. Lawsuits filed under the Act are heard in front of the Cyber Appellate Tribunal before appeals to higher courts. This act also requires digital publication of all activities of these committees as well as changes to the law for access by the general public.

The Indian Parliament addressed concerns about new methods of online commerce with the Amendment Act of 2008. This revision changed Section 43 of the original Act to increase corporate responsibility for ensuring consumer identity security. The years following the Act’s passage saw trends like online auction web sites and an increase in computer use for commercial transaction. Businesses that offer online transactions and digital signature capability to Indian consumers can also be sued for negligence under the amendment if they do not protect consumers against identity theft.

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