Comprehensive Guide to Nepal's Electronic Transactions Act, 2063

Introduction

In the digital age, the integrity and security of electronic transactions are paramount. Recognizing this, Nepal enacted the Electronic Transactions Act, 2063 (2008), establishing a legal framework to govern electronic records, digital signatures, and cyber activities.

Objectives of the Act

The primary goals of the Electronic Transactions Act, 2063 include:

• Legal Recognition: Establishing the legal validity of electronic records and digital signatures.
• Security Assurance: Ensuring the integrity and reliability of electronic communications.
• Cybercrime Prevention: Deterring unauthorized access and alterations to electronic data.
• Regulatory Framework: Providing guidelines for digital transactions and related activities.

Key Provisions

1. Electronic Records and Digital Signatures

The Act legitimizes electronic records and digital signatures, stipulating that:

• Electronic Records: Information generated, sent, received, or stored electronically is legally valid.
• Digital Signatures: Electronic signatures that are unique to the signatory and capable of verifying authenticity are recognized.

2. Certifying Authorities

To ensure trust in digital communications:

• Licensing: Entities must obtain a license to operate as Certifying Authorities.
• Renewal: Licenses are subject to annual renewal, ensuring ongoing compliance.
• Oversight: The Controller oversees the activities of Certifying Authorities, maintaining standards and security.

3. Digital Signature Certificates

The process for obtaining digital signature certificates involves:

• Application: Individuals or entities apply to a licensed Certifying Authority.
• Issuance: Certificates are issued upon verification, typically within seven days.
• Suspension/Revocation: Certificates can be suspended or revoked under specific conditions, such as misuse or compromise.

4. Cyber Offenses and Penalties

The Act outlines various cyber offenses and corresponding penalties:

5. Information Technology Tribunal

To adjudicate cyber-related cases:​

• Establishment: An Information Technology Tribunal comprising legal, technical, and commercial experts is formed.
• Appellate Tribunal: An appellate body hears appeals against decisions made by the Tribunal or the Controller.

6. Government Use of Digital Signatures

The Act empowers government entities to:

• Electronic Documentation: Issue and accept electronic forms, applications, and certificates.
• Digital Authentication: Utilize digital signatures for official documents, enhancing efficiency and security.

7. Network Service Providers (continued)

Network Service Providers (NSPs) are not automatically liable for user-generated content. However, if they knowingly allow the distribution of illegal or harmful material, they can be held accountable. The Act encourages proactive content management while protecting platforms operating in good faith.

8. Subscriber Responsibilities

Subscribers—individuals or organizations issued a digital signature certificate—must comply with specific duties:

• Generate Key Pair: Each subscriber must generate a secure private-public key pair.
• Certificate Acceptance: Publishing or authorizing a certificate implies legal acceptance.
• Secure the Private Key: The subscriber must keep their private key confidential. If compromised, they must immediately notify the Certifying Authority.
• Key Deposit: In special cases (e.g., national security), the Controller may order a subscriber to deposit their private key with the government.

These measures ensure the integrity of electronic transactions and protect both the subscriber and the general public from potential misuse.

9. Use of Electronic Records in Government

The Act encourages digital transformation within the government by allowing:

• Publication of laws, ordinances, and official notices electronically.
• Electronic applications, payments, and issuance of licenses or permits.
• Use of digital signatures in governmental workflows, increasing speed, efficiency, and auditability.

This is an essential move toward e-governance in Nepal, aligning with the country’s Digital Nepal Framework.

10. Tribunal & Legal Framework for Cybercrime

Nepal’s ETA envisions a dedicated judicial structure to handle electronic and cyber-related disputes:

This structure enhances specialization and ensures timely resolution of cybercrime cases.

11. Miscellaneous Provisions

• Exempted Documents: Not all records can be maintained electronically. For example, land deeds, wills, or court submissions still require paper documentation under existing laws.
• Amendments & Repeals: The Act supersedes earlier electronic transaction ordinances and provides scope for further rule-making by the Government of Nepal.
• Public-Private Integration: It allows for integration with both domestic and foreign certifying authorities, ensuring global compatibility.

12. Criticism & Legislative Reforms

Although progressive, the ETA has drawn criticism, particularly around Section 47, which penalizes the publication of “illegal materials” in digital form. This has reportedly been used to suppress journalists and online content creators.

Moreover, the proposed IT Bill aims to replace the ETA, introducing even stricter penalties for violations, including fines up to NPR 1 million and jail time of up to 10 years. This has raised freedom of expression concerns, with stakeholders demanding a more balanced approach to regulation and civil liberties.

Summary of Cyber Offenses and Punishments

Conclusion

The Electronic Transactions Act, 2063 (2008) is a pioneering legislation that has provided a foundational legal framework for digital transformation in Nepal. From validating electronic records and regulating digital signatures to punishing cyber offenses and enabling e-governance, the Act plays a critical role in building trust in Nepal’s digital economy.

However, as technology evolves, so must the law. Future reforms must ensure that security, innovation, and freedom of expression are balanced, making Nepal a digitally empowered, legally secure society.

How Notary Nepal Helps

While Notary Nepal does not provide direct digital signature or certification services, we specialize in legal document verification, translation, and certified notarization—critical for ensuring your digital transactions and e-governance paperwork are recognized, especially for international and cross-border submissions.

If you're navigating official processes like digital ID submissions, e-passport applications, or court-related electronic documentation, Notary Nepal can assist with multilingual notarized translation and certification.