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Four Financial Tasks to Do Before December 31, 2023

As an investor, you should complete important financial tasks before the year ends to avoid any last-minute hassle.

  • 3,597 Views | Updated on: Apr 24, 2024

As the year winds down and the festive cheer fills the air, it is easy to let our financial to-do lists get swept away in the holiday whirlwind. But before you get caught up in wrapping gifts and planning parties, take a moment to tackle crucial financial tasks before December 31st.

It is necessary to be aware of important financial deadlines that could affect your finances as the year comes to an end in December. Several financial deadlines are coming up, including those for filing late Income Tax Returns (ITRs) and mutual fund nominations. These simple steps can ensure you enter the new year with a sense of financial security and peace of mind.

1) Update Your Bank Locker Agreement

The Reserve Bank of India (RBI) has introduced a revised bank locker agreement that clarifies the rights and responsibilities of both the bank and the locker holder. This agreement addresses regulations and liability terms changes, clarifies rent payment and default procedures, and outlines grievance redressal mechanisms.

Why Update?

On August 18, 2021, the Reserve Bank of India (RBI) published updated bank safe deposit lockers guidelines. These instructions mandated that banks execute updated contracts with existing locker users by January 1, 2023. However, because many customers neglected to sign the updated locker agreements, the RBI extended the deadline for signing them. As per the extended deadline, signing the new agreement is mandatory for all existing locker holders by December 31, 2023. Failure to do so may result in temporarily suspending access to your locker.

How to Update?

To update your bank locker agreement with the bank, you should:

  • Visit your bank branch: Submit the required documents (existing agreement, ID proof, etc.) and sign the new agreement physically.
  • Online update: Some banks offer online document submission and agreement signing through their website or app. Check with your bank for this option.
  • Download agreement: You can download the revised agreement from your bank’s website, fill it out, and submit it online or at the branch.

2) Update Your UPI ID Documents

The National Payments Corporation of India (NPCI) mandates all UPI users to update their KYC documents by December 31, 2023. This includes verifying your Aadhaar card, PAN card, and bank account details with your UPI app provider.

Why Update?

It is important to update KYC as it helps verify your identity and prevent fraudulent transactions. Failure to update may result in suspension or deactivation of your UPI ID as mandated by NPCI.

How to Update?

If you want to update your KYC for UPI ID, you can do it by following methods:

  • Within your UPI app: Most UPI apps have built-in KYC update features. Follow the app’s instructions to link your Aadhaar, PAN, and bank account details.
  • Visit your bank branch: Your bank can also help you update your KYC details for your UPI ID linked to them.

3) Add a Nominee to Your Demat and Mutual Fund Accounts

A nominee is someone who inherits your investments in your Demat account and mutual funds in case of your demise. This ensures the smooth transfer of your holdings and avoids legal complications.

Why Add a Nominee?

SEBI mandates adding a nominee by December 31, 2023. Without a nominee, your holdings may get frozen, causing delays and complexities for your legal heir.

How to Add a Nominee?

To add a nominee to your Demat and mutual fund accounts:

  • Contact your Demat account provider or mutual fund company: Different providers may have slightly different processes. Some allow online updates through their website or app, while others may require submitting a physical form.
  • Provide nominee details: You must share your chosen nominee’s name, address, PAN, and relationship with you. You can specify a percentage share for each nominee if you have multiple.

4) File Your Income Tax Return (ITR)

ITR is a document you submit to the government declaring your income earned during the financial year and claiming applicable deductions and tax credits.

Why File ITR?

Filing ITR is mandatory for individuals whose income exceeds certain thresholds. It helps determine your tax liability and avoids penalties for late filing. There are repercussions for failing to file income tax returns (ITR) by December 31st (mandated by the Income Tax Department), including interest on overdue taxes, penalties, and possible delays in getting refunds.

How to File ITR?

Before you start filing your ITR, gather all relevant documents, including your PAN Card, Form 16/16A (Provided by your employer), bank statements, investment documents, Aadhaar card.

Step 1: Choose the Right ITR Form

The Income Tax Department provides various ITR forms for different types of income and taxpayers. Choose the form that suits your income sources. Commonly used forms include ITR-1 (Sahaj) for salaried individuals and ITR-2 for those with income from multiple sources.

Step 2: Online or Offline Filing

You can file your ITR online on the official Income Tax e-filing website or through authorized e-filing intermediaries. The online method is more convenient and faster. However, if you opt for the offline method, you can download the applicable ITR form, fill it out offline, and then submit the XML file online.

Step 3: Register on the Income Tax e-filing Portal

If you have not registered on the e-filing portal, create an account. If you already have an account, log in using your PAN as the user ID.

Step 4: Choose the Appropriate Assessment Year

The assessment year is the year in which your income is assessed and the year following the financial year for which the return is filed.

Step 5: Fill in the Details

Follow the form’s instructions and fill in the required details accurately. Provide information about your income, deductions, and exemptions.

Step 6: Verify Your ITR

After filling in the details, verify your ITR. You can e-verify using methods such as Aadhaar OTP, Net Banking, or Electronic Verification Code (EVC). Alternatively, you can physically mail the signed ITR-V to the Centralized Processing Centre (CPC) within 120 days of e-filing.

Step7: Keep Acknowledgment

Once your ITR is successfully submitted, you will receive an acknowledgment in the form of ITR-V. If you are e-verified, you will receive an acknowledgment email. Keep these documents for future reference.

Step 8: Rectify Errors (if any)

If you make any errors, you can rectify them by filing a revised return before the end of the assessment year.

Way Forward

Addressing these four financial tasks as the calendar year concludes can set the stage for a financially healthy and prosperous new year. You can also add reviewing and adjusting your budget and maximizing retirement contributions. By engaging in tax planning and ensuring your emergency fund is solid, you will be better equipped to handle whatever the future may hold.

Remember, proactive financial management is the key to building a secure and resilient financial foundation.

Key Takeaways

  • Crucial financial tasks require immediate attention before December 31st to avoid penalties, service disruptions, or legal complications.
  • The Reserve Bank of India (RBI) has introduced a revised bank locker agreement with clarified terms and procedures. Existing locker holders must update their agreements by December 31, 2023.
  • Verify your Aadhaar, PAN, and bank details with your UPI app provider by December 31st to avoid suspension or deactivation.
  • Without a nominee, your holdings may get frozen, causing delays for your legal heir. SEBI mandates adding a nominee by December 31, 2023.
  • File your ITR before the year’s end to avoid any penalties by the income tax department.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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