E-Commerce Accounting & Compliance: Capturing Hidden Profits Across Platforms

By Surekha S Ahuja

 "In the world of e-commerce, sales are reported on the platform—but profits are only realized in the books. Miss a reconciliation, and silent losses quietly erode your margins."

Introduction: The Hidden Complexity of Multi-Platform Accounting

Managing settlements across Amazon, BigBasket, Flipkart, Meesho, Nykaa, and other platforms may seem straightforward. Yet, without structured accounting procedures, TCS, TDS, GST, promotional adjustments, and platform commissions can silently impact profitability.

Small teams, even with competent accountants, often encounter:

• Misaligned GST/ITC claims across platforms.

• Overlooked TDS obligations on promotional or contract expenses.

• Misclassified promotional freebies affecting reported revenue.

• Inconsistent platform expense recognition, masking true margins.

• Lost recoverables due to non-reconciliation of gross sales vs net settlements.

Professional Insight: Hidden balances on platforms can exceed net monthly profits. A rigorous SOP and structured reconciliation framework is not just compliance—it protects and realizes revenue.

The Multi-Platform Accounts SOP & Workflow

1. Platform Settlement Receipt

• Collect all platform settlement statements and verify totals: gross sales, returns, chargebacks, TCS/TDS deductions, and promotional adjustments.

2. Breakdown & Categorization

• Sales Revenue: Net of returns and chargebacks.

• Promotional Freebies: Document separately; do not reduce revenue.

• Returns / Chargebacks: Link to original invoices.

• Commissions & Fees: FBA, logistics, COD, marketing; segregate from promotional costs.

3. Adjust Platform Expenses

• Record platform-specific costs as operating expenses.

• Separate from marketing/promo to reflect true operating margin.

4. Invoice / Debit / Credit Note Posting

• Classify taxable vs non-taxable components in ERP.

• Attach promo documentation / DN-CN references.

• Use correct voucher types for audit traceability.

5. GST / TCS / ITC Classification

• Reconcile GSTR-2B vs ERP entries; verify TCS receivables.

• Claim eligible ITC; exclude freebies/promo adjustments from ITC reversal.

• Ensure compliance with CBIC circulars & notifications.

6. TDS Determination & Recording

• Apply Sec 194C TDS on promotional/service contracts >₹30,000 per quarter.

• ERP entry:

  • Dr Promo Expense

  • Cr TDS Payable

  • Cr Vendor / Platform

• Deposit via Form 26Q; verify Form 26AS.

7. Monthly Reconciliation & Tracker Update

• Compare settlement vs ERP vs portal.

• Track ITC, TCS, TDS, platform expenses, promo costs, net realization.

• Update monthly tracker for variance analysis and audit readiness.

8. Variance Analysis & Escalation

• Flag deviations >1%.

• Escalate to CFO / Head Accounts.

• Document corrective actions for audit trail.

9. Quarterly Review & Audit Documentation

• Conduct full quarterly reconciliation across all platforms.

• Ensure RCM compliance.

• Retain audit-ready vouchers, promo documentation, DNs/CNs, and reconciliations for 7 years.

Platform-Specific Accounting Insights

Platform	Transaction Type	GST	TCS	Accounting Treatment	TDS Applicability	Platform Expenses / Commission
Amazon	Promo Invoice	Yes	1%	Dr Promo Expense, Dr ITC, Cr Vendor	2% Sec 194C >30k	8–15% commission, FBA charges
BigBasket	Debit Note	No	1%	Dr Promo Expense, Cr Sales Adjustment	2% Sec 194C	6–12% commission, logistics charges
Flipkart	Settlement Invoice	Yes	1%	Dr Sales, Dr ITC, Cr Vendor	2% Sec 194C	8–18% commission, packing fees
Meesho	Promo Credit / DN	No	1%	Dr Promo Expense, Cr Vendor	2% Sec 194C	10–20% commission
Nykaa	Invoice / DN	Yes	1%	Dr Expense/Sales, Dr ITC, Cr Vendor	2% Sec 194C	12–22% commission, COD charges

Key Insight: Freebies and promotional adjustments are marketing expenses, not revenue reductions. Platform commissions must always be separated from operating costs to preserve margin clarity.

Professional Insights for CFOs & Audit Committees

• Silent losses are rarely due to sales—they stem from incomplete accounting and reconciliation.

• Small accounting teams can efficiently manage reconciliation with structured SOPs, trackers, and maker–checker control.

• Proper classification of commissions, expenses, and promotional items ensures accurate reporting.

• Timely variance analysis and escalation prevents audit exceptions and unclaimed credits.

To maximize recoverables and maintain compliance:

• Implement platform-specific SOPs for accounting, reconciliation, and compliance.

• Maintain a monthly tracker capturing GST, TCS, TDS, platform expenses, and promotional costs.

• Conduct quarterly variance analysis and escalate material deviations to CFO.

• Seek professional guidance for audit readiness, Ind AS / GST alignment, and cross-platform compliance.

"E-commerce platforms report the sales, but only disciplined accounting ensures the profit story is realized."

ITR-U and Foreign Assets: A Legal–Practical Analysis of Scope, Limits and Risks

 By CA Surekha S Ahuja

The introduction of the Updated Return (ITR-U) under section 139(8A) represents a calibrated compliance mechanism—designed to encourage voluntary correction of past defaults while preserving the deterrent framework of the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 (hereinafter “BMA”).

In cases involving foreign assets or foreign-source income, ITR-U operates within particularly narrow legal boundaries, and its misuse or misinterpretation can materially aggravate risk rather than mitigate it.

Nature of ITR-U: Curative, Not Amnesty

ITR-U is not an amnesty scheme. Legislatively, it is structured as a cost-bearing corrective facility, available only where additional tax is payable and subject to strict disqualifications.

Its design reflects a conscious policy choice: to reward early, voluntary compliance while denying relief once the tax administration has detected or acted upon information.

This distinction is critical in foreign-asset cases, where detection is increasingly data-driven rather than complaint-driven, and the consequences of misreporting can extend to penalty and prosecution under the BMA.

Assessment Year Scope and Temporal Finality

ITR-U is assessment-year specific and strictly time-bound.

• Currently, it can be filed for up to four preceding Assessment Years, subject to the statutory outer limit (culminating on 31 March 2026, year-wise).

• Each year must independently satisfy eligibility conditions.

• The facility does not revive closed years and cannot be extended beyond statutory expiry.

Key takeaway: Once the window closes for a particular year, no discretionary power exists to condone delay.

Statutory Conditions Where ITR-U Is Barred

The law expressly prohibits ITR-U for any AY where:

• Filing would result in a refund, reduction of tax liability, or increase in losses;

• A search, survey, or requisition has been initiated;

• Assessment, reassessment, revision, or recomputation proceedings are pending or completed;

• Information received under CRS, FATCA, or international exchange has been acted upon by the Department.

Absolute exclusion: Once triggered, the ITR-U route is irreversibly foreclosed for that year.

Foreign Assets: Disclosure Regime Remains Intact

A common misconception is that ITR-U regularises past foreign-asset non-disclosure. It does not.

• Schedule FA disclosure remains mandatory for Resident and Ordinarily Resident taxpayers, regardless of:

  • Whether income arose;

  • Whether income is exempt or taxed abroad;

  • Duration of holding during the year.

• Consistency across Schedule FA, FSI, TR, AL, and Part A is not procedural—it is substantive.

Implication: Failure or inaccuracy in disclosure constitutes a standalone statutory violation, even if the additional tax is paid via ITR-U.

CRS/FATCA Environment: The Shrinking Compliance Window

The contemporary enforcement landscape fundamentally alters the risk calculus:

• Foreign financial institutions routinely report balances, interest, and beneficial ownership under CRS and FATCA;

• These data are ingested into AIS/TIS risk engines, triggering automated scrutiny.

Consequences:

• Once such data is processed, ITR-U is no longer available;

• The matter transitions from voluntary compliance to enforcement mode.

Practical insight: ITR-U is therefore a pre-detection remedy, and its value diminishes rapidly once external data flows are processed.

Penalty Exposure Under the Black Money Act

Even after filing ITR-U, the Assessing Officer may initiate penalty proceedings under:

• Section 42 BMA – Failure to file return with foreign assets;

• Section 43 BMA – Failure to disclose foreign assets.

Penalty quantum: Typically ₹10 lakh per year, subject to statutory thresholds.

Crucial point: Payment of additional tax under section 140B does not neutralise this penalty risk. These operate in parallel statutory domains.

Prosecution: Limited Mitigation, No Immunity

ITR-U does not confer immunity from prosecution.

• At best, voluntary, pre-detection full disclosure, supported by credible explanation of source and ownership, may mitigate enforcement action.

• In cases of wilful concealment, complex offshore structures, or repeated defaults, ITR-U offers limited protection.

Practical counsel: Filing must be coupled with accurate documentation and rationale; otherwise, prosecution risk persists.

Practical Failure Points in Foreign-Asset ITR-U Filings

Experience highlights frequent failure points:

• Reporting foreign income without asset disclosure;

• Selection of incorrect Schedule FA tables;

• Mismatches between FA, AL, and FSI;

• Ignoring indirect beneficial interests or signing authority;

• Assuming NR-period assets are automatically exempt from disclosure.

Such errors trigger scrutiny and undermine the intended benefit of ITR-U.

Analytical Position

From a legal-policy perspective, ITR-U in foreign-asset cases is best understood as:

• A last voluntary compliance checkpoint before enforcement;

• Valuable only if timely, complete, and accurate;

• Not a shield against detection, penalty, or prosecution.

Key principle: The quality and timing of disclosure matters more than the mere act of filing.

Conclusion

In foreign-asset cases, ITR-U is narrow, conditional, and unforgiving:

• Its availability is lost easily;

• Misuse is costly;

• Benefits are strictly limited.

Strategic guidance:

• Used early and correctly, ITR-U can substantially reduce downstream exposure;

• Used late, partially, or mechanically, it may intensify consequences under both the Income-tax Act and the BMA.

Professional evaluation is not optional—it is a legal and practical necessity in all foreign-asset compliance matters.

Amendment to Director KYC Filing Framework

The Ministry of Corporate Affairs (MCA), vide notification dated 31 December 2025, has amended the rules governing Director Know Your Customer (KYC) compliance.

As per the amendment, directors shall be required to file Form DIR-3 KYC / DIR-3 KYC Web once every three consecutive financial years, in place of the earlier annual filing requirement. The amended provisions shall come into force with effect from 31 March 2026.

The KYC filing is required to be completed on or before 30 June of the immediately succeeding third consecutive financial year.

Directors who have already completed their KYC up to the date of the notification shall be required to file their next DIR-3 KYC by 30 June 2028.

It is further clarified that the obligation to intimate and update any change in personal particulars—including mobile number, email address, or residential address—within 30 days of such change shall continue to apply and shall operate independently of the three-year KYC filing cycle.

The amendment is aimed at rationalising compliance requirements while maintaining the accuracy and integrity of director information on MCA records. 

New Year Wish — Where Bhāv Changes, Prosperity Begins

 As the New Year unfolds,

may families invite not just success,
but grace.

May this year awaken a change of bhāv
towards the Mother—
the silent strength, the living Shakti Swaroopa of every home.

Shastras are clear:
where the Mother is respected, Lakshmi stays.
Where she is taken for granted, prosperity loses its roots.

May this New Year bring awareness before regret,
respect before rituals, and affection while she is present.

Because when the Mother is honoured,
families remain united, businesses endure, and futures prosper.

Wishing a New Year blessed with Dharma, dignity, and lasting abundance.

The Eye That Never Sleeps: Audit Brain, AI, and the 360° Redesign of Compliance in India

By CA Surekha S Ahuja 

Introduction: From Post-Mortem Audit to 360° Predictive Oversight

Traditional audit—retrospective, sample-based, and periodic—is dead. By 2025, compliance is continuous, intelligent, and integrated across GST, Income Tax, and corporate regulations. Every transaction leaves a digital footprint, every vendor interaction is traceable, and every anomaly can trigger real-time alerts.

The Audit Brain is the strategic layer that interprets AI-driven insights, guides human judgment, and transforms audit from a reactive exercise into predictive, preventive intelligence. Firms leveraging this 360° approach not only minimize fraud risk but also gain a competitive advantage, staying ahead of regulators and peers alike.

India’s 360° AI Compliance Ecosystem

A. Income Tax – Project Insight

Project Insight is no longer just a data repository; it is a behavioral prediction engine:

• 360° Profiling: Integrates bank statements, property records, SFT filings, credit card data, social media, and third-party inputs.

• Behavioral Scoring: Detects discrepancies, e.g., declared income ₹5L vs. spending ₹50L, triggering automated risk interventions.

• Escalation Logic: Gentle nudges escalate to scrutiny notices when thresholds are breached.

• Competitive Edge: Firms that reconcile data proactively prevent alerts, protect reputation, and maintain cash flow continuity.

B. GST – ADVAIT: The Network Hunter

ADVAIT provides transaction-level, real-time detection of indirect tax risks:

• Network Graph Analysis: Detects circular trading, collusion, and repeated ITC fraud.

• Vendor Contagion Risk: Compliance lapses propagate across supply chains; proactive vendor hygiene reduces exposure.

• Physical-Digital Integration: RFID and FASTag confirm actual goods movement, eliminating “bill trading.”

• Fraud Patterns Prevented: Bill recycling, ghost vendors, false ITC claims—all mitigated before enforcement action.

Feature	Global Standard (UK/EU/Brazil)	India (ADVAIT/GSTN)
Data Matching	Post-filing, monthly/quarterly	Real-time, transaction-level
Physical Tracking	Spot checks	Automated RFID/FASTag integration
Fraud Detection	Retrospective recovery	Pre-emptive blocking
Network Analysis	Ad-hoc investigation	Continuous automated graph intelligence

C. MCA21 V3 – Corporate Sentinel

The revamped MCA21 integrates corporate filings with tax and GST data for holistic oversight:

• Early Warning System: Detects unusual financial patterns, repeated directors, and shell-company behavior.

• Auto-Adjudication: Routine penalties are automated; complex cases escalate.

• Proactive Compliance: Moves from complaint-driven to predictive enforcement, reducing the risk of fraud.

The Audit Paradigm Shift: Continuous, Intelligent, and Fraud-Proof

From Sampling to Population-Level Analysis

Entire datasets are now analyzed in real time. AI identifies anomalies and risks that traditional sampling would miss.

From Retrospective to Continuous Audit

Internal audits are no longer periodic—they are continuous, integrated, and predictive. Audit Brain intelligence interprets AI alerts, prioritizes issues, and prevents unnecessary regulatory triggers.

Fraud Prevention as Core Principle

• AI Detects: Unusual transactions, vendor anomalies, network contagion.

• Audit Brain Decides: Which alerts are material and which are false positives.

• Internal Controls Ensure: Policy enforcement, materiality judgment, and preemptive mitigation.

Audit Brain in Action: Strategic Compliance Intelligence

Component	Role	Strategic Value
AI Tools	Detect anomalies and network risks	Pre-emptive alerts and fraud prevention
Audit Brain	Interpret AI output, prioritize, shape responses	Reduces false positives, strengthens controls, ensures materiality
Internal Controls	Embed policies, enforce thresholds	Prevents unnecessary triggers, strengthens governance
Compliance Triggers	Automated escalations for high-risk events	Ensures timely intervention, continuous monitoring

Applications for Competitive Advantage:

• Monthly reconciliations across GST, IT, and MCA filings.

• Vendor and supply chain compliance hygiene to prevent contagion risk.

• Continuous monitoring of key transactions and network interactions.

• Strategic pre-emptive advisory to avoid regulatory flags.

Key Takeaways for a 360° Compliance Strategy

• Government is Ahead: Real-time, AI-powered, population-level enforcement is active.

• Human Judgment is Scarce and Critical: Materiality, intent, and commercial rationale cannot be automated.

• Internal Audit is Indispensable: It is the last filter against unnecessary triggers.

• Continuous Monitoring is Non-Negotiable: Monthly reconciliations, vendor network checks, and documentation discipline are essential.

• Strategic Edge Through Audit Brain: Firms that interpret AI insights, preempt triggers, and enforce robust controls minimize fraud risk and outperform competitors.

Conclusion: The 360° Glass House Economy

Audit is no longer about detecting errors—it is about shaping outcomes before alerts arise. AI captures data, detects patterns, and predicts risk. The Audit Brain interprets, prioritizes, and guides action. Internal controls enforce discipline. Together, they create a fraud-resistant, predictive compliance ecosystem.

Firms that master this 360° approach—across GST, Income Tax, and MCA compliance—not only survive the regulatory gaze but gain strategic advantage over competitors, staying on top in India’s digital, data-driven compliance landscape.

The Midnight Divide: File Tomorrow—or Step Into the Penal Regime of ITR-U

 By CA Surekha S Ahuja

Introduction — Why Tomorrow Is Not “Just Another Due Date”

Tomorrow marks a legal point of no return in the Income-tax Act.

Until tomorrow, a taxpayer may still comply through a normal return, with all its rights intact—refunds, loss carry-forwards, revisions, and routine processing.
From the day after tomorrow, that landscape changes fundamentally.

The law then permits only a curative, penal alternative—ITR-U (Updated Return)—available on strict conditions, at a substantial cost, and with irreversible consequences.

This post explains what ends tomorrow, what remains thereafter, and why the difference is not procedural but legal and financial.

What Statutorily Ends Tomorrow (AY 2025-26)

Tomorrow is the last date to file:

• Belated Return under Section 139(4)

• Revised Return under Section 139(5)

Once tomorrow expires:

• No original return can be filed

• No belated return is permitted

• No revision is possible

The right to file a normal return is permanently extinguished by law.

What Changes After Tomorrow

From the next day, the law presumes default, not delay.

You lose:

• The right to claim or receive refunds

• The right to carry forward losses

• The right to revise or correct voluntarily

And you are left with only one constrained statutory option.

The Only Alternate After Tomorrow — ITR-U Explained

The sole route available after tomorrow is:

ITR-U (Updated Return) under Section 139(8A)

ITR-U is not an extension of time.
It is a post-default compliance facility, designed to permit voluntary disclosure only before departmental detection.

Time Limit for ITR-U

• Can be filed within 48 months from the end of the relevant Assessment Year

• For AY 2025-26, the outer limit is 31 March 2029

The window exists—but the cost and restrictions escalate sharply.

Mandatory Conditions to File ITR-U

ITR-U can be filed only if all of the following are satisfied:

• Total income must increase

• No loss return permitted

• No reduction of tax liability

• No claim or enhancement of refund

Before filing, the taxpayer must pay in full:

• Tax on additional income

• Interest under Sections 234A, 234B and 234C

• Fee under Section 234F (where applicable)

• Additional tax under Section 140B

When ITR-U Is Completely Barred

ITR-U cannot be filed if, for the relevant year:

• Notice under Section 148 or 148A has been issued

• Search or survey has been conducted

• Assessment or reassessment is completed

• Prosecution proceedings have been initiated

• Information is received under Black Money, Benami or allied laws

At that point, voluntary compliance ceases to exist.

The Real Cost: Additional Tax Under Section 140B

Period of filing ITR-U	Additional Tax
Within 12 months	25%
12–24 months	50%
24–36 months	60%
36–48 months	70%

This levy is over and above normal tax and interest—
a penal consequence in substance, though named otherwise.

What You Irrevocably Lose Under ITR-U

• ❌ No refund, even if excess tax is paid

• ❌ No carry forward of business, capital or house-property losses

• ❌ No revision or correction once filed

• ❌ Greater scrutiny exposure due to risk profiling

ITR-U is one-time, one-way, and irreversible.

Consequences of Ignoring Both Options

If a taxpayer neither files tomorrow nor validly uses ITR-U:

• Reassessment under Sections 147/148

• Show-cause proceedings under Section 148A

• Best-judgment assessment under Section 144

• Penalties up to 200% of tax

• Prosecution exposure under Section 276CC

At that stage, control shifts entirely to the tax authority.

Why Filing Tomorrow Remains the Best Legal Outcome

Aspect	File Tomorrow	ITR-U Later
Additional tax	Nil	25%–70%
Refund eligibility	Yes	No
Loss carry-forward	Yes	No
Revision possible	Yes	No
Compliance posture	Normal	Post-default

Closure — The Choice That Ends Tomorrow

Tomorrow is not merely a due date.
It is the dividing line between compliance and correction,
between choice and compulsion.

ITR-U is a lifeline, not a privilege.
It exists to contain damage—not to replace timely filing.

If a return can be filed tomorrow,
file it.

Because once tomorrow passes,
compliance no longer belongs to you alone—it belongs to the statute.

Extension of Due Date for Annual Filings – FY 2024–25

 The Ministry of Corporate Affairs (MCA), vide General Circular No. 08/2025 dated 30 December 2025, has granted relaxation of additional fees and extension of time for filing of Financial Statements and Annual Returns under the Companies Act, 2013.

Accordingly, companies are permitted to file the following e-Forms pertaining to Financial Year 2024–25, without payment of additional fees, up to 31 January 2026:

• MGT-7

• MGT-7A

• AOC-4

• AOC-4 CFS

• AOC-4 NBFC (Ind AS)

• AOC-4 CFS NBFC (Ind AS)

• AOC-4 XBRL

All other provisions, conditions, and requirements as prescribed under General Circular No. 06/2025 dated 17 October 2025 shall remain unchanged.

Consolidated XBRL Reporting under the Companies Act, 2013

 By CA Surekha S Ahuja

CSR Expenses, Related Party Transactions & Government Grants

(Legal Applicability, Consolidation Logic and MCA XBRL Compliance)

Objective of this Guidance Note

This Guidance Note provides a complete and practical framework for understanding and implementing Consolidated Financial Statements (CFS) in XBRL, with focused guidance on:

• Corporate Social Responsibility (CSR) expenditure

• Related Party Transactions (RPT)

• Government Grants

It also conclusively addresses a frequent misconception:

Whether filing Standalone Financial Statements in XBRL dispenses with the requirement to file Consolidated XBRL.

The note is aligned with:

• Sections 129 and 135 of the Companies Act, 2013

• Ind AS 110, 20, 24 and 37

• Schedule III

• MCA XBRL Taxonomy (latest applicable)

Whether Consolidated XBRL Is Mandatory if Standalone XBRL Is Filed

Settled Legal Position

Filing of standalone financial statements in XBRL does NOT substitute or eliminate the requirement to file consolidated financial statements in XBRL.

Statutory Reasoning

• Section 129(3) mandates preparation of consolidated financial statements where a company has subsidiaries, associates or joint ventures

• The Companies (Accounts) Rules require separate filing of standalone and consolidated financials

• MCA has prescribed separate AOC-4 filings and separate XBRL instances for:

  • Standalone financial statements

  • Consolidated financial statements

Practical Conclusion

Standalone XBRL and Consolidated XBRL are parallel statutory filings.
Compliance with one does not cure non-compliance with the other.

Core Concept to Understand Before Everything Else

Legal obligations arise at the entity level.
Consolidated financial statements present the group as a single economic unit.

Consolidation:

• does not create new statutory obligations, but

• aggregates and reports the financial impact of entities that already have obligations.

This distinction is critical for CSR, RPT and Government Grants.

CSR Expenses in Consolidated XBRL Reporting

CSR Applicability – Entity Level Only

CSR obligation under Section 135 applies only to companies that independently meet the prescribed thresholds.

• Holding company may be CSR-liable

• Some subsidiaries may be CSR-liable

• Some subsidiaries may not be CSR-liable

CSR obligation is never computed on consolidated profits.

Why CSR Appears in Consolidated Financial Statements

Under Ind AS 110, consolidated financial statements reflect the combined financial performance of the group.

Therefore:

• CSR expenditure incurred by CSR-liable entities is included in consolidated expenses

• CSR obligation and spending are aggregated for disclosure purposes only

Aggregation does not mean group-level applicability.

Mandatory CSR Disclosures (Schedule III & XBRL)

CSR disclosures are mandatory, numerical and comparative, not descriptive.

The following must be disclosed in consolidated XBRL:

• Amount required to be spent

• Amount actually spent

• Amount spent through:

  • Direct implementation

  • Group entities

  • Trusts / NGOs

• Unspent CSR amount (recognised as provision / liability)

Consolidation Logic for CSR (High-Risk Area)

• CSR expense is never eliminated in consolidation

• Only intra-group CSR funding transactions are eliminated

• Unspent CSR represents a present obligation under Ind AS 37 and must be recognised as a liability

The most common MCA/XBRL error is elimination of CSR expense instead of elimination of only the funding leg.

Related Party Transactions (RPT) in Consolidated XBRL

Scope of Related Parties in Consolidation

Under Ind AS 24, consolidated RPT disclosures must cover transactions with:

• Parent company

• Subsidiaries

• Associates and joint ventures

• Key managerial personnel of the parent and the group

• Relatives of KMPs

The disclosure universe expands in consolidation.

Elimination vs Disclosure – The Golden Rule

Aspect	Accounting Treatment	Disclosure Requirement
Intra-group sales/services	Eliminated	Must be disclosed
Management fees	Eliminated	Must be disclosed
CSR routed via subsidiaries	Eliminated	Must be disclosed
Loans/guarantees	Eliminated	Must be disclosed

Elimination removes duplication of numbers, not disclosure obligations.

RPT Disclosures in XBRL

RPT disclosures must be tabular, covering:

• Nature of relationship

• Nature of transaction

• Transaction amount

• Outstanding balances

• Whether transactions are at arm’s length

Blank RPT tables are a frequent cause of XBRL validation failure.

Government Grants in Consolidated XBRL

Recognition Principles

Government grants are recognised at the entity level under Ind AS 20 only when:

• There is reasonable assurance of compliance with conditions, and

• Receipt of the grant is reasonably certain

Consolidated Treatment

In consolidated financial statements:

• Grants received by subsidiaries are included

• Intra-group transfers of grant funds are eliminated

• Deferred government grants appear as consolidated liabilities

• Amortisation of grants is reflected in consolidated profit and loss

Mandatory Disclosures

Disclosures must include:

• Nature of grants

• Amount recognised as income

• Deferred grant balances

• Conditions attached to grants

Grant income and deferred grant liabilities must be tagged separately in XBRL.

Why CSR, RPT and Government Grants Are High-Scrutiny Areas

These areas attract regulatory focus because:

• They involve statutory compliance, not merely accounting policy

• They require cross-reconciliation between:

  • Computation

  • P&L

  • Notes

  • XBRL tags

• MCA validation tools perform internal consistency checks

Most failures arise from conceptual misunderstanding, not from XBRL software issues.

Practical Guidance for Review and Execution

For Partners (Oversight Perspective)

• Confirm consolidated XBRL is filed separately

• Validate CSR applicability entity-wise

• Ensure CSR expense is not eliminated

• Ensure RPT disclosures exist even where balances are nil

• Ensure grants are consistently recognised and tagged

For Article Teams (Execution Perspective)

• Understand legal applicability before consolidation

• Never suppress disclosures because of eliminations

• Always reconcile numbers across computation, notes and XBRL

• If in doubt, disclose rather than omit

Final Professional Position

Standalone XBRL fulfils entity-level reporting.
Consolidated XBRL fulfils group-level transparency.
Both are independently mandatory when applicable.

Correct consolidated XBRL reporting follows a clear sequence:

Law → Accounting → Consolidation → Disclosure → XBRL Tagging

Any deviation from this sequence creates compliance risk.

Closing Note

A clear conceptual understanding of CSR, RPT and Government Grants in consolidation ensures:

• Clean MCA validation

• Smooth audits

• Defensible regulatory positions

This Guidance Note may be relied upon as a standard internal reference for consolidated XBRL reporting.

Peer Review – Complete Professional Protocol for Firms, Reviewers, and Staff

 By CA Surekha S Ahuja

(Aligned with ICAI Guidelines and Best Practices)

Peer Review is a collegial, system-focused quality assurance exercise, designed to enhance the robustness of a Practice Unit’s (PU) processes, documentation, and ethical compliance. It is not an audit, investigation, or disciplinary exercise, but a structured dialogue aimed at improving professional systems, while preserving client confidentiality and organizational dignity.

Role of the Peer Reviewer

The Peer Reviewer, typically a senior professional, is expected to:

• Conduct the review independently, objectively, and courteously.

• Evaluate the PU’s systems, procedures, and documentation frameworks, focusing on compliance with Standards on Auditing/Assurance, SQC 1 / SA 220, and ICAI Code of Ethics.

• Select assurance engagements on a sample basis, strictly limited to the review period.

• Maintain absolute confidentiality; observations are constructive and system-oriented, not punitive.

• Retain only peer review questionnaires, checklists, professional notes, and non-client-specific firm manuals shared with consent.

Professional boundaries: The reviewer shall not copy, photograph, scan, remove, or email client files, nor use them as reviewer working papers. Full or unrestricted system/cloud access is not required.

Responsibilities of the Practice Unit

The Practice Unit ensures a structured, compliant, and cooperative environment:

• Pre-review preparation: Submit completed Peer Review Questionnaire, assurance client list with fees, and a concise note on firm policies—independence, supervision, engagement quality review, acceptance, and documentation.

• Controlled access: Client and engagement files are available only on-site or via controlled on-screen inspection, under supervision.

• Confidentiality protection: Sensitive client information is masked as appropriate.

• Coordination: A designated partner or senior supervises all interactions with the reviewer.

• Constructive engagement: Facilitate factual clarifications and explanations, avoiding unsolicited interpretations or informal sharing.

Internal Staff SOP at the Practice Unit

Staff play a critical supporting role in maintaining professionalism and ensuring smooth review execution:

Do’s:

• Familiarize themselves with review protocols and file organization.

• Respond factually and courteously to reviewer queries via the designated partner/senior.

• Ensure engagement files and firm records are complete, indexed, and ready for inspection.

• Maintain strict client confidentiality at all times.

Don’ts:

• Do not copy, photograph, scan, or transmit client records.

• Do not provide passwords, system or cloud access.

• Do not answer reviewer queries independently or beyond scope.

• Do not remove or alter engagement files during or after the review.

Post-review obligations: Re-secure all records, implement follow-up instructions, and continue to maintain confidentiality of observed information.

Guiding Principles

• Peer Review is a professional dialogue, not a fault-finding mission.

• Controlled access, system-based assessment, and constructive feedback define an effective review.

• Respect, professionalism, and confidentiality are the pillars that ensure trust, compliance, and continuous improvement.

Internal Caption:
“Professional restraint, system readiness, and cooperative engagement form the foundation of an effective Peer Review.”

MCA Business Activity Codes for MGT-7 (2025)

 By CA Surekha S Ahuja

Complete NIC-2008 Classification for MCA V3 Portal

(Applicable for FY 2024-25 onwards)

Why This Update Matters

With the complete shift to the MCA V3 portal, the Ministry of Corporate Affairs now requires companies to report their Principal and Ancillary Business Activities strictly using NIC-2008 numeric codes while filing Form MGT-7.

The earlier alphanumeric MCA codes (A1, C3, M2, etc.) are no longer in use.
As of December 2025, NIC-2025 has not been adopted for MGT-7.

This post serves as a single-page, practical reference for professionals and companies to select correct NIC-2008 codes and avoid filing errors.

Key Filing Rules (Read This First)

• Only NIC-2008 numeric codes are accepted on MCA V3

• Multiple business activities can be selected

• Turnover percentage must total exactly 100%

• Principal activity must align with financial statements and objects clause

NIC-2008 Business Activity Codes (MGT-7 Ready)

 Agriculture, Forestry & Fishing

01 Crop and animal production and allied activities
02 Forestry and logging
03 Fishing and aquaculture

Mining & Quarrying

05 Mining of coal and lignite
06 Extraction of crude petroleum and natural gas
07 Mining of metal ores
08 Other mining and quarrying
09 Mining support service activities

Manufacturing

10 Food products
11 Beverages
12 Tobacco products
13 Textiles
14 Wearing apparel
15 Leather and related products
16 Wood and cork products
17 Paper and paper products
18 Printing and recorded media
19 Coke and refined petroleum products
20 Chemicals and chemical products
21 Pharmaceuticals and medicinal products
22 Rubber and plastic products
23 Non-metallic mineral products
24 Basic metals
25 Fabricated metal products
26 Computer, electronic and optical products
27 Electrical equipment
28 Machinery and equipment n.e.c.
29 Motor vehicles, trailers and semi-trailers
30 Other transport equipment
31 Furniture
32 Other manufacturing
33 Repair and installation of machinery and equipment

Construction

41 Construction of buildings
42 Civil engineering (roads, bridges, utilities)
43 Specialized construction activities

Trade (Wholesale & Retail)

45 Wholesale and retail trade of motor vehicles
46 Wholesale trade (except motor vehicles)
47 Retail trade (except motor vehicles)

Information Technology & Communication

58 Publishing activities
61 Telecommunications
62 Computer programming, consultancy and related services
63 Information service activities (data hosting, web portals)

Finance & Insurance

64 Financial service activities (except insurance and pension funding)
65 Insurance and pension funding
66 Activities auxiliary to financial services and insurance

Real Estate

68 Real estate activities with own or leased property
68 Real estate activities on fee or contract basis

Professional, Scientific & Consultancy Services

69 Legal and accounting activities
70 Management consultancy
71 Architecture, engineering and technical testing
72 Scientific research and development
73 Advertising and market research
74 Other professional, scientific and technical activities
75 Veterinary activities

Education

85 Education (schools, colleges, training institutes, coaching)

Healthcare & Social Services

86 Hospital activities
87 Residential nursing and elderly care
88 Social work activities without accommodation

 How to Report in MGT-7 (V3)

1. Identify actual revenue streams from financial statements

2. Select relevant NIC-2008 codes from MCA dropdown

3. Allocate turnover percentage for each activity

4. Ensure total equals 100%

5. Match principal activity with revenue and objects clause

Compliance Insight (Most Important)

MGT-7 filing is now NIC-centric, not legacy-code-centric.
Correct NIC-2008 selection ensures smooth acceptance and avoids future MCA queries.

Please write to us for Excel Shhet of NIC Code