XBRL Applicability Under Companies Act 2013

XBRL Applicability Under Companies Act 2013

XBRL stands for extensible business reporting language. It is a language that is specially used for electronic Communication for the purposes of financial data as well as business. 

These types of languages are being developed and revolutionized around the world. 

This language has many major benefits, due to which it has become highly in demand for business reporting globally. 

Some of the major benefits of extensible business reporting language include Communication of business, analysis of business information, and preparation of business information. 

Using the XBRL language in business helps save costs, providing the greatest efficiency to those involved in using and supplying financial data. 

There are many companies that are required to file their financial statement under extensible business reporting language for which the provisions are mentioned in the Companies Act 2013. 

The criteria for the above mention purpose are explained in the article. 

What is XBRL Applicability?

XBRL stands for extensible business reporting language. It is a popular language used for e-communication, especially for business data and financial data for companies and business entities. 

It is a standard communication language that uses electronics form 2 to express itself report 5 financial statements, and do other such functions by the companies. 

In other words, it is an organized method of presentation as well as the method of reporting.  The content presented with this language's help cannot be changed. 

How does extensible business reporting language or XBRL work?

There are two types of documents that are used to make data readable as well as presentable with the help of XBRL. 

These two types of documents are as follows; 

  • Instance document
  • Taxonomy

The elements as well as their relationships concerning regulatory requirements are known as taxonomy. 

Using this process prescribed by professionals or regulators, businesses and other companies are required to map their reports and presentations to generate a valid or legal XBRL instance document. 

The mapping process in this procedure means that the reported concept should match the company's corresponding element in the taxonomy. 

In addition to taxonomy, other information such as the period of data, a unit of measurement, the scale of reporting, and others are also included in documents such as instance documents. 

Filling of XBRL applicability under the Companies Act 2013

A few provisions are mentioned in the Companies Act of 2013 for registration or filling under XBRL. 

These provisions in the Companies Act 2013 clearly state the requirements, such as form as well as a document that are required in xbrl. 

Here is the list of companies that are required to file a register for their financial systems and financial statements concerning XBRL and its e form.

  • All companies that are listed need to register with XBRL.
  • All companies that have already paid capital of Rs 5 crore rupees or more than 5 crore rupees need to register with XBRL.
  • All those companies whose annual turnover is 100 crore rupees or more than 100 crore rupees need to register with XBRL.
  • All the companies are responsible for preparing financial statements as per companies rules of 2015. 

Exemptions of XBRL filings

A few exceptions are not required to fill or register their financial statements with respect to XBRL. These exemptions include the following companies:

  • Housing finance companies
  • Insurance companies
  • Non-banking financial companies
  • banking financial companies

Documents required for XBRL filings

The main documents that are required for the feelings of XBRL, as mentioned in the Companies Act 2013, are as follows:

  • Report of directors
  • Annual report
  • Secretarial audit report
  • Corporate governance report
  • AOC 1 as well as AOC 2.
  • Audit reporting
  • CARO report
  • Significant account policy
  • Other financial statements include balance sheets, loss accounts, profit accounts, cash flow, statement profit account loss, and accounts related to balance sheets and notes for accounts.

Advantages of XBRL

It has been many years since XBRL, and its advantages have come into existence for companies in India. 

Now it has been used in companies and businesses even more widely as well as economically. 

XBRL language is not mandatory for various companies under the Companies Act 2013, as mentioned above. 

These companies are required to send financial statements according to the required schemes. 

There are various advantages of XBRL language in different phrases of companies and businesses. 

The quality of XBRL applicability and language has also been improved so that it can offer necessary information and reports for better decision-making. 

It easily provides controls for fillings over the main elements of the report. These advantages make it easier to have data consistency, horizontal control, and vertical control. 

This also means that data available on one report can have not only quality, but also a range that is expected according to certain requirements and conditions. 

It presents the same information and consolidated reports. Some other advantages of using XBRL are as follows: 

  • Vertical control
  • Horizontal control
  • Automation of different functions and operations
  • Expense reduction
  • Data transparency
  • Ease of comparing data, transforming data, and analysing data.
  • Reliability and speed
  • Revision of equality
  • Improve as well as a better way of reporting
  • Accurate data
  • Time-saving process and cost-effective
  • Safe in the process of data handling
  • Better decision-making about the report
  • Analytical process
  • Automatic collection of data

The uses and advantages of the XBRL language in business and other companies are wide and varied. 

It makes it possible for consumers and producers of financial data to easily switched resources from typical time involving or time-consuming as well as costly manual processes to this automatic process. 

It also removes the procedure of re-entry and assembly of data. This language makes it easier for companies to transfer data into different formats, such as SQL or Excel. 

It makes the analysis of data faster and simpler. It also helps to convert data into a database, which is very useful. 

This way, all types of data can be extracted with the help of queries. This language is also used as a tool by investors to compare as well as analyze financial statements of business entities and companies. 

Process of XBRL fillings

  • The first step requires the creation of a document known as the XBRL instance document.
  • The validation tool of XBRL can be downloaded from the MCA or municipal corporation affair portal.
  • Use the above downloaded to two regulate and validate the document created in the first step, the instance document.
  • Pre-scrutiny steps are required for the validation of instance documents through the XBRL tool.
  • The instance document is to be attached with form AOC 4 of XBRL.
  • The final step requires submitting the AOC 4 XBRL form on the MCA portal.

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XBRL applicability includes every public company listed on India's stock exchange. 

In addition, it also includes every listed company with an annual turnover of more than 100 crore rupees. 

There are various provisions that determine applicability as well as non-applicability for XBRL. 

In simple words, it is a communication language that is used for business data or financial data for reporting in different companies. 

It offers various benefits such as preparing, analysing, managing reporting and preparing business information. 

The provisions for XBRL applicability and XBRL filing is mentioned in Companies Act 2013.

FAQs related to XBRL applicability

1. What is the non-applicability of XBRL?

The companies that have non-applicability for XBRL and are exempted from filling these financial statements in XBRL include housing finance companies, non-banking financial companies, and companies that are engaged in the business of insurance as well as the banking sector. These companies are not included in filing their financial statements as per the provisions of XBRL.

2. What is XBRL, as mentioned in the Companies Act 2013?

XBRL stands for extensible business reporting language. It is an electronic language that is used for Communication for financial data as well as business data. It is used for organizing and better decision-making about business reporting globally. It offers major advantages in analysis preparation, Communication of business reports, and business information.

3. Which company is required XBRL?

There are provisions mentioned in the Companies Act 2013 for the companies that are required to register their financial statements in XBRL. All foreign companies, as well as domestic companies, are required to provide financial statements in the format of xbrl.

4. Can xbrl be opened in Excel?

Xbrl uses various features which are required to change the formats of xbrl reports. It makes it easier to view as well as add the same xbrl document and reports directly in Excel.

5. What are some limitations of xbrl?

Some limitations of xbrl include dimensions and specifications. The calculations that are related to dimensions are very complicated in xbrl.

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