XBRL Applicability

  • Blog|Income Tax|
  • 4 Min Read
  • By Taxmann
  • |
  • Last Updated on 24 February, 2023

Table of Content

1. What is XBRL?

2. XBRL Full Form

3. Key features of XBRL

4. XBRL Applicability

5. Advantages of XBRL Filing

6. Documents Required for AOC-4 XBRL?

1. What is XBRL?

XBRL is eXtensible Business Reporting Language, a standardized language for exchanging financial and business information between different software applications. It is a freely available, open-standard format that enables the efficient and accurate exchange and analysis of financial data.

2. XBRL Full Form

The full form of XBRL is eXtensible Business Reporting Language.

XBRL, or eXtensible Business Reporting Language, has transformed the way financial and business information is exchanged between different software applications. This standardized language offers significant benefits in terms of cost savings, greater efficiency, and improved accuracy and reliability to all parties involved in supplying or using financial data.

3. Key features of XBRL and its applicability in the financial industry.

3.1 Tagging

One of the most important features of XBRL is its ability to tag financial data with standardized tags. This makes it easy for software applications to read and understand the data, which in turn enables more efficient and accurate exchange and analysis of financial information.

3.2 Validation and Compliance Checks

XBRL software should have built-in validation rules and compliance checks to ensure that the XBRL data is accurate, complete, and compliant with regulatory requirements. This ensures that companies can meet regulatory deadlines and avoid penalties for non-compliance.

3.3 Mapping and Conversion

XBRL software should be able to map financial data to XBRL tags and convert it into XBRL format. This enables companies to easily convert their financial data into a standardized format for reporting and analysis.

3.4 Collaboration and Workflow Management

XBRL software should have features for collaboration and workflow management to enable multiple users to work on the same XBRL data and ensure that it is submitted to regulatory agencies in a timely manner. This ensures that all parties involved in financial reporting are on the same page and that reporting deadlines are met.

3.5 Reporting and Analytics

XBRL software should provide features for reporting and analytics to enable users to analyze and compare XBRL data across different companies and industries. This enables companies to gain insights into their own financial performance as well as the performance of their competitors.

3.6 Integration with Other Software

XBRL software should be able to integrate with other software applications, such as accounting and financial software, to enable seamless transfer of financial data into XBRL format. This saves time and reduces errors associated with manual data entry.

3.7 Security and Data Privacy

XBRL software should have robust security features to ensure the confidentiality, integrity, and availability of XBRL data. This is especially important given the sensitive nature of financial data.

3.8 User-Friendly Interface

XBRL software should have a user-friendly interface that is easy to use and navigate, with clear instructions and helpful prompts. This makes it easier for users to adopt XBRL and leverage its benefits.

Dive Deeper:
Beginners Guide to MCA-21 and Filing of XBRL

4. XBRL Applicability

XBRL is widely used in the financial industry, and is applicable to a wide range of organizations, including publicly traded companies, financial institutions, and regulatory agencies. It is commonly used for financial reporting and analysis, and is recognized as a global standard for financial data exchange. In India, the Ministry of Corporate Affairs has mandated select class of companies to file financial statements in XBRL mode and using the XBRL Taxonomy. These companies include all companies listed with any Stock Exchange(s) in India and their Indian subsidiaries, all companies having paid-up capital of Rupees five crore and above, all companies having turnover of Rupees one hundred crore and above, and all companies which are required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015.

5. Advantages of XBRL Filing

The advantages of XBRL filing include:

  1. Automated collection of data
  2. Enhanced reliability and accuracy of data
  3. Time-saving process
  4. Improved analysis and reporting
  5. Safe handling of data
  6. Cost-effectiveness
  7. Assists in making better decisions

6. What are Documents Required for AOC-4 XBRL?

AOC-4 XBRL is an e-form used by Indian companies to file their financial statements in XBRL mode with the Registrar of Companies (ROC). The e-form is filed under the provisions of the Companies Act, 2013, and the rules prescribed thereunder. Here are the documents required for AOC-4 XBRL filing:

  • Financial Statements: The financial statements include the balance sheet, profit and loss account, and cash flow statement of the company. The financial statements should be prepared as per the applicable accounting standards and should be audited by a Chartered Accountant.
  • Board Resolution: A board resolution is required to authorize the filing of the AOC-4 XBRL form with the ROC. The resolution should be signed by the authorized signatories of the company.
  • Auditor’s Report: The auditor’s report is a report prepared by the auditor of the company regarding the financial statements of the company. The auditor’s report should be signed by the auditor and should be in the prescribed format.
  • Directors’ Report: The directors’ report is a report prepared by the directors of the company regarding the affairs of the company. The directors’ report should be signed by the authorized signatories of the company.
  • XBRL Instance Document: The XBRL instance document is the file containing the financial data of the company in XBRL format. The XBRL instance document should be prepared using the taxonomy prescribed by the Ministry of Corporate Affairs (MCA) and should be validated using the MCA validation tool.
  • Digital Signature Certificate (DSC): The AOC-4 XBRL form should be digitally signed by the authorized signatories of the company using their DSC. The DSC should be valid and registered with the MCA.
  • Challan for Payment of Fees: The AOC-4 XBRL form filing fees should be paid online using the MCA portal. The challan for payment of fees should be generated online and should be attached to the AOC-4 XBRL form.

These are the documents required for AOC-4 XBRL filing in India. Companies should ensure that they have all the required documents and information before filing the AOC-4 XBRL form with the ROC. It is important to note that non-compliance with the XBRL filing requirements may result in penalties and legal action by the authorities.

In conclusion, XBRL has revolutionized business reporting by providing a common, electronic format for business and financial data that offers significant benefits in the preparation, analysis, and communication of business information. Its wide range of features, including tagging, validation and compliance checks, collaboration and workflow management, reporting and analytics, integration with other software, security and data privacy, user-friendly interface, and cost-effectiveness, make it a valuable tool for organizations looking to improve the accuracy, efficiency.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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