XBRL in India: A Strategic Initiative for Enhanced Financial Transparency

The advent of XBRL in India began in 2007, led by the Institute of Chartered Accountants of India (ICAI). Recognizing the transformative potential of digital business reporting, the ICAI championed the adoption of XBRL to enhance regulatory reporting across diverse sectors. Their goal was to democratize access to information through systematic XBRL filings, collaborating with regulatory authorities that manage banks, registered companies, insurance firms, and listed corporations.

This pivotal initiative by the ICAI not only boosted the implementation of XBRL filings across India but also laid a robust foundation for its widespread use throughout the financial landscape. The effort was aimed at ensuring that financial data became more accessible and comparable, thereby increasing transparency and aiding in better decision-making across financial platforms.

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

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

Ministry of Corporate Affairs (MCA)

Ministry of Corporate Affairs mandated that the XBRL regulatory reporting include all companies (in phases) from 31^st 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. Â 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 (RBI)

Reserve Bank of India (India’s 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 harmonies 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.

Related Blog: RBI and the Adoption of XBRL

Securities and Exchange Board of India (SEBI)

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’s SUPER-D Platform

Purpose

The SEBI Unified Platform for Electronic Reporting and Dissemination (SUPER-D) aims to unify reporting structures for listed companies, mutual funds, and SEBI-registered intermediaries. This unified platform simplifies the process of filing returns and reports with SEBI and relevant stock exchanges, reducing redundancy and enhancing efficiency.

Scope

SUPER-D covers a wide range of entities and reports, integrating filings from listed companies, mutual funds, and other SEBI-registered intermediaries. This integration encompasses various returns and reports, including financial statements, compliance filings, and regulatory disclosures, streamlining data submission across India’s financial sector.

Mutual Funds Participating in SEBI’s XBRL MF Pilot Project

SEBI’s XBRL MF Pilot Project has attracted participation from several prominent mutual funds. Here is a list of those currently involved:

Kotak Mahindra Asset Management Company Limited
HDFC Asset Management Company Limited
Tata Asset Management Ltd
Sundaram Asset Management Company Limited
SBI Funds Management Private Limited
LIC Mutual Fund Asset Management Company Ltd
IDFC Asset Management Company Limited
Edelweiss Asset Management Limited
DSP BlackRock Investment Managers Pvt. Ltd.
ICICI Prudential Asset Management Company Ltd.

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.

SEBI’s XBRL Technical Advisory Committee

Formation

The Securities and Exchange Board of India (SEBI) established the XBRL Technical Advisory Committee (X-TAC) to oversee the development and implementation of the SEBI Unified Platform for Electronic Reporting and Dissemination (SUPER-D). This committee plays a crucial role in ensuring the success of the platform.

Responsibilities

Technical Oversight: X-TAC is responsible for studying the technical requirements of SUPER-D and selecting suitable vendors to support its development and functioning.
Development and Implementation: The committee oversees the platform’s development process, ensuring smooth implementation and alignment with SEBI’s goals.
Technical Advice: X-TAC provides ongoing advice on technical issues related to the platform, ensuring SUPER-D remains effective and responsive to industry needs.

SEBI Introduces Issue Summary Document for IPO Filings in XBRL Format

SEBI has introduced the Issue Summary Document (ISD) for filing IPO papers and other securities issues in XBRL format, helping to provide structured data to stakeholders. This initiative is part of SEBI’s efforts to make relevant information available at stock exchanges and depositories in a structured manner.

Phased Rollout: The rollout of the ISD begins on March 1, 2023, with a phased implementation:

Phase 1: Public issues of specified securities for offer documents filed on or after March 1.

Phase 2: Further issues, including IPOs, FPOs, and various other types of securities, implemented from April 3.

Phase 3: Open offer, buy-back, and voluntary delisting from May 2.

Two-Stage Filing: The ISD must be filed in two stages:

Pre-Issue: Filed with pre-issue fields.

Post-Issue: Filed with post-issue fields after allotment is completed.

Utility Development: SEBI has directed stock exchanges to develop a utility to facilitate ISD filing by submitting entities.
Advertisements: Lead managers must disseminate all advertisements related to public issues in PDF format on the website of the stock exchange from March 1^st .

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. Â Â 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.

A Closer Look at XBRL Taxonomy and How to Create Instance Documents

What is XBRL Taxonomy?

XBRL taxonomy serves as the foundational architecture for digital business reporting. It outlines a vast array of business concepts, detailing the relationships and definitions among them. Additionally, it supports text labels in multiple languages, making it a versatile tool for global financial reporting.

This structured approach ensures that financial data is categorized precisely, enhancing consistency and clarity across reports.

How Companies Use XBRL Taxonomy

For companies to comply with international reporting standards, they must map their financial statements according to the taxonomy prescribed by regulators. This process includes identifying and matching the financial data reported to the relevant taxonomy elements.

Key details such as the time period of the data, the units of measurement, and the scale of reporting are meticulously incorporated using designated XBRL tags in what is created as an instance document.

Understanding XBRL Instance Documents

XBRL instance documents are electronic representations of business reports formatted according to XBRL standards. They consist of data entries defined by the taxonomy—each annotated with explanations and the context of the values.

These documents are integral to financial reporting as they provide a clear, structured format linked to at least one taxonomy, ensuring all data points are well-defined and easily accessible.

XBRL Taxonomy Development (INDIA)

India has developed its own taxonomy to cater to the specific requirements of Indian regulatory standards, known as the Ind-AS Taxonomy. This is aligned with the international IFRS standards to ensure global compatibility.
The taxonomy is periodically updated to incorporate changes in reporting standards and business practices. The latest version includes updates for new Ind-AS standards and amendments brought by the MCA.

By meticulously mapping their financial reports to the appropriate XBRL taxonomy and carefully crafting instance documents, companies achieve greater transparency and coherence in their financial disclosures.

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. [ Related Blog: Cost Audit XBRL ]

Documents Required for AOC-4 XBRL Filing

For effective compliance and detailed financial disclosure, the following documents are integral when filing AOC-4 XBRL in India:

Financial Statements: Complete sets including the profit and loss account and balance sheet provide a snapshot of the company’s financial health and operational performance.
Cash Flow Statements: These documents, along with associated schedules, track the inflow and outflow of cash within the company, offering insights into its financial stability and liquidity.
Board and Auditor Reports: The annual report compiled by the company’s board, alongside the audited financial statements, offers a comprehensive overview of the company’s activities and financial status during the reporting year.
Comptroller and Auditor General Comments: If applicable, observations or comments from the Comptroller and Auditor General of India can provide additional credibility and scrutiny to the financial reports presented.

These documents collectively help stakeholders understand the financial dynamics and accountability of the company comprehensively.

For more insights into the intricacies of AOC-4 and MGT-7 filings, visit our detailed handbook at Understanding AOC-4 and MGT-7 Filings. This resource is designed to help you navigate the complexities of compliance and reporting requirements effectively.

XBRL Filing for Cost Compliance and Audit Reports in India

Scope and Applicability

XBRL filing requirements specifically target companies that are covered under the Cost Audit Order No. 52/26/CAB-2010 dated 6 November 2012. Companies not falling under this order are not required to file their cost audits in XBRL format.

Filing Requirements and Procedures

Companies must file compliance reports in XBRL format if their activities/products are governed by the Cost (Accounting Records Rules) 2011 and they meet certain financial thresholds. Notably, if such activities/products are already included in a cost audit, a separate compliance report is not necessary.

Roles and Responsibilities

The filing and certification process involves several key responsibilities:

A member of the Institute of Cost Accountants of India must certify the compliance report.
The cost auditor is responsible for the digital filing and accuracy verification of the XBRL documents submitted to the Central Government.

How DataTracks can help you?

DataTracks is a global leader with 19 years of experience in the preparation of financial statements in XBRL and iXBRL formats, serving 28,000 clients across 26 countries. They specialize in creating financial reports for filing with various regulators including the SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland, and MCA in India. Annually, DataTracks prepares over 400,000 XBRL statements, supported by their world-class software solutions (SaaS) and Template solutions that enable clients to convert XBRL files independently.

With a team of certified accountants proficient in US GAAP, UK GAAP, India GAAP, and IFRS, DataTracks provides exceptional service quality and reliability in financial compliance and reporting.

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.

Once a company starts XBRL filing, are they required to continue using this format?

Yes, once a company files its financial statements in XBRL format under Section 137 of the Companies Act, they must continue to use this format for all subsequent filings, regardless of any later changes in their classification.

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.