Journey of XBRL Reporting in India

The XBRL wave started in India in late 2007 when the Institute of Chartered Accounts of India, the premier accounting and statutory body, realised the critical role of Digital Business Reporting in the arena of regulatory reporting and the optimum advantage that it enjoyed in levelling the playing field. ICAI initiated the idea of using XBRL in collaboration with the different regulators in India that control the Registered companies, Banks, Insurance undertakings and Listed companies.

The four major regulators involved in the adoption of XBRL in India are the following entities:

  • Ministry of Corporate Affairs – the business register for companies in India
  • Reserve Bank of India -  the apex financial regulator
  • Securities and Exchange Board of India – regulates listed companies
  • Insurance Regulatory and Development Authority (IRDA) – the insurance regulator

Ministry of Corporate Affairs:

Ministry of Corporate Affairs mandated that the XBRL regulatory reporting include all companies (in phases) from 31st March 2011 who would adopt the Commercial and Industrial Taxonomy developed by ICAI. In the first year, the primary focus was on a certain class of companies who would have to file their Balance Sheet and Profit and Loss in XBRL format from the FY 2010-11 onwards.

The mandate covered around 25000 companies in Phase I. These companies were:

  • All companies listed in India and their Indian subsidiaries
  • All companies with a paid up capital of Rs. 5 crores and above, and
  • All companies with a turnover of Rs. 100 crores and above

The second year witnessed a significant change in the regulatory reporting format which radically affected the implementation of XBRL. New Schedule VI i.e. the new and improved disclosure system for Financial Statements was enforced by the Companies Act. The taxonomy architecture also underwent considerable change. Tuples were replaced by dimensions for data modelling.  At the same time the companies were required to file their cost audit report and compliance report in XBRL format. This was one of the first XBRL implementations across the globe for cost-related information. These practices are now the norm.

Reserve Bank of India

Reserve Bank of India (Indias monetary regulator) has implemented the XBRL-based regulatory filings for banks using the Internet and Indian Financial Network (INFINET).

The implementation was done in a phased manner wherein, in 2008, Phase I covering a sizeable portion of the domestic banks (seven returns) was introduced; the taxonomy was developed in the context of banking requirements including the elements pertaining to the reporting information of the Indian domestic banking system. All the scheduled banks in India were required to file using XBRL standards.

Currently RBI is working on Phase II whose objective is to harmonise the external sectors business information, offsite surveillance and monitoring information by bringing them into the gamut of the centralised XBRL database.  The implementation of Phase II started in 2012 to include 42 returns out of nearly 225 different returns for the banks and non-bank entities.

Securities and Exchange Board of India

SEBI is in the process of implementing a Unified Platform for Electronic Reporting and Dissemination named as SUPER-D, which will be done using XBRL data standards. XBRL (eXtensible Business Reporting Language) technology based platform will be used for reporting by Listed companies, Mutual Funds and other SEBI registered intermediaries. The Mutual Fund Taxonomy is developed by SEBI.

SEBI invites all the registered Mutual Fund/Assets Management Companies to participate on voluntary basis as filers for submitting XBRL filings of the specified reports to SEBI through XBRL MF Pilot Project. These XBRL filings will be in addition to the filings under the current system. Until today, 10 Mutual funds have joined in this pilot project of SEBI and have started XBRL filing of the specified reports with SEBI on voluntary basis.

SEBI formed the XBRL Technical Advisory Committee (X-TAC) for guiding its efforts in the development of the platform, and also towards working on implementing XBRL in the filing of mutual funds.

Insurance Regulatory and Development Authority

 Insurance Regulatory and Development Authority is planning to implement XBRL. XBRL India and ICAI together have prepared Draft Templates of Taxonomies for Life and Non-Life Insurance Companies separately as the schedule for presentation of financial statements (laid down in the Insurance Act) prescribes different formats for Life and Non-Life insurance companies. Accordingly, spreadsheet templates are prepared separately for the Life and Non-life Insurance Companies.

Future of XBRL in India:

XBRL is the future of financial reporting and it offers several advantages to all kinds of financial data users.   The XBRL data can be used by the individual investors for doing their own analysis rather than using third party investment advisory service. The companies can implement XBRL in their internal reporting systems for business analysis (e.g., budgeting and production systems).

In order to provide the data freely and widely for big data analysis, the data needs to be tagged and stored in common repositories of all the regulatory bodies. This can be tagged to a common base taxonomy along with the inclusion of a set of additional specific elements to meet their reporting requirements. A strong data analytical engine can facilitate analysis of data which is stored in the government repositories.

Overview of XBRL Filing Requirements and Exemptions as per MCA Notification (9th September 2015):

Mandatory XBRL Filing Criteria

The Ministry of Corporate Affairs (MCA), through its notification on 9th September 2015, introduced the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015, mandating XBRL filing for specific classes of companies. These rules apply for financial years commencing on or after 1st April 2014. Companies required to file their financial statements and other documents in e-form AOC-4 XBRL include:

  • Companies listed on any stock exchange in India and their Indian subsidiaries.
  • Companies with a paid-up capital of ₹5 crore or more.
  • Companies with an annual turnover of ₹100 crore or more.
  • Companies previously covered under the 2011 XBRL filing rules.

Exemptions from XBRL Filing

 Certain sectors and types of companies are exempt from XBRL filing to accommodate industry-specific reporting standards and regulatory oversight. Exemptions are granted to:

  • Banking companies regulated by the Reserve Bank of India (RBI).
  • Insurance companies regulated by the Insurance Regulatory and Development Authority (IRDA).
  • Non-Banking Financial Companies (NBFCs), including those registered with or exempt from registration by the RBI but are regulated by other bodies like SEBI, IRDA, or the National Housing Bank.
  • Power sector companies engaged in generation, transmission, or distribution of electricity based on their object clause, exempt from FY 2014-15 onwards. However, companies producing electric power for their own use (captive consumption) are not exempt.

Special Note on Cost Audit Reports in XBRL

Companies obligated to submit cost audit reports and documents under section 148(6) of the Companies Act, 2013, and associated rules must file these reports and documents in XBRL format using the taxonomy provided in Annexure-III. This requirement is applicable for financial years starting on or after 1st April 2014, through e-Form CRA-4 as specified under the Companies (Cost Records and Audit) Rules, 2014.

How DataTracks can help you?

DataTracks is a global leader in preparation of financial statements in XBRL and iXBRL formats for filing with regulators. DataTracks also provides software (SaaS) and Template solutions for those who would like to convert XBRL files themselves. DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland and MCA in India. DataTracks provides world-class services with its team of certified accountants experienced in US GAAP, UK GAAP, India GAAP and IFRS.

To find out more about DataTracks, visit www.datatracks.in or send an email to enquiry@datatracks.in

The views expressed are that of the authors and DataTracks is not responsible for the contents or views expressed therein. If any part of this blog is incorrect, inappropriate or violates the IP rights of any person or organization, please alert us at ceo@datatracks.com. We will take immediate action to correct any violation.

 

FAQs on XBRL Reporting in India

Why is XBRL reporting important in India?

XBRL reporting in India enhances the accuracy, efficiency, and reliability of financial data submission to regulatory authorities like the Ministry of Corporate Affairs (MCA). It simplifies the process of preparing, filing, and analyzing financial statements, thereby improving transparency and corporate governance.

Who needs to file financial statements in XBRL format with the MCA?

In India, the following entities are required to file their financial statements in XBRL format:

  • Companies listed on any stock exchange in India and their Indian subsidiaries.
  • Companies with a paid-up capital of ₹5 crore and above.
  • Companies with a turnover of ₹100 crore and above.
  • Entities previously covered under the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2011.

Are there any exemptions from XBRL filing?

Yes, certain entities are exempt from filing financial statements in XBRL format:

  • Banking companies regulated by the RBI.
  • Insurance companies regulated by the IRDA.
  • NBFCs registered with the RBI or exempt from RBI registration but registered with other regulators (SEBI, IRDA, National Housing Bank, etc.).
  • Power companies engaged in generation, transmission, or distribution of electricity for FY 2014-15 onwards, except those producing electric power for captive consumption.

How does XBRL benefit companies and stakeholders?

XBRL offers numerous benefits, including improved data accuracy, faster preparation and filing processes, and enhanced analytical capabilities. For stakeholders, XBRL ensures better accessibility to financial data, leading to more informed decision-making.

What documents are required to be filed in XBRL format?

Companies mandated to use XBRL reporting must file their annual financial statements and cost audit reports (if applicable) in XBRL format using the specified taxonomy and e-Forms provided by the MCA.

How has XBRL reporting evolved in India?

Since its introduction, XBRL reporting in India has seen significant enhancements in terms of the scope of companies covered, the complexity of data reported, and the technological infrastructure supporting XBRL submissions. The MCA has periodically updated the XBRL taxonomy to align with changes in accounting standards and regulatory requirements, facilitating a smoother and more comprehensive reporting process.

What are the different types of XBRL reports required to be filed in India?

The specific XBRL reports companies need to file depend on their size and type. Some common reports include:

  • AOC-4 XBRL (Balance Sheet and Profit & Loss Account)
  • 23AC-XBRL (Cost Audit Report)
  • 23ACA-XBRL (Compliance Report under Cost Accounting Rules)

Where can I find XBRL services in India?

Several professional service providers offer XBRL conversion and filing services in India. These services help companies comply with the XBRL reporting requirements by converting their financial statements into XBRL format accurately and efficiently. Companies in India can leverage XBRL service providers like DataTracks to ensure smooth and efficient XBRL compliance. These services offer accurate financial statement conversion, streamlined filing processes, and data quality assurance, minimizing errors and saving valuable resources. Explore various providers to find the best fit for your specific needs.

How can companies file XBRL reports in India?

  • Companies cannot directly file XBRL reports with the MCA portal. They need to use XBRL software to prepare and validate their reports before uploading them through the portal.
  • Numerous XBRL service providers in India offer assistance with the entire process, including software, tagging, validation, and submission.

What is the future of XBRL reporting in India?

XBRL is expected to play an increasingly significant role in financial reporting in India. We can anticipate:

Expansion of mandatory adoption: The scope of mandatory XBRL filing might be extended to include more companies and reporting requirements.

Advancements in taxonomy: The XBRL taxonomy might be further refined to capture additional data points and enhance reporting standardization.

Integration with other systems: XBRL reporting might be integrated with other regulatory portals for a more streamlined reporting process.

Focus on data analytics: The potential of XBRL data for advanced data analytics and regulatory decision-making might be explored further.

 

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