A household holds Rs 4 crore across the father's account at an illustrative 30% slab and the mother's at an illustrative 5%: Rs 1.5 crore of debt and Rs 2.5 crore of equity in all. Place each asset to cut the tax bill, stating the clubbing rules as a framework to confirm.

Put all Rs 1.5 crore of debt in the mother's name and all Rs 2.5 crore of equity in the father's. The household mix is unchanged, but tax on the debt income falls from Rs 2.32 lakh to Rs 0.56 lakh a year, a saving of Rs 1.76 lakh. It works only because her Rs 1.5 crore is her own inheritance; if it had been his gift, clubbing would tax the income back to him and the saving would vanish.

Two siblings sharing a car and a scooter should give the car to the one who drives on the highway; the family still owns one car and one scooter, but each vehicle does its job better. Asset locationDeciding which account holds which asset, so that the household allocation stays the same but the total tax falls. keeps the household's 62.5/37.5 mix and changes only who holds what, putting the asset whose income is taxed at the holder's rate with the holder whose rate is lowest. Debt interest is taxed at the slab; equity gains at one flat rate. So debt goes to the mother.

Today the father holds Rs 93.75 lakh of debt, whose Rs 7.03 lakh of interest is taxed at 30%, and the mother Rs 56.25 lakh, taxed at 5%: Rs 2.32 lakh a year in all. With all Rs 1.5 crore of debt in her name, the Rs 11.25 lakh of interest is taxed at 5%, Rs 0.56 lakh, saving Rs 1.76 lakh a year. Reinvested at an assumed 8% for ten years, that saving grows to about Rs 25.5 lakh. The father's Rs 2.5 crore becomes all equity.

Two things, and the interviewer asked about clubbing for a reason. First, the mother's money must genuinely be hers: if the Rs 1.5 crore had been a gift from her husband, the income from it would be clubbed back to him at 30%, costing Rs 3.38 lakh whichever way the assets were placed. Here it is an inheritance from her parents, so location works; the documents proving that belong in the file. Second, slabs rise with income. Rs 11.25 lakh of interest may lift her above an illustrative 5%; at an average of 10% the tax is Rs 1.125 lakh and the saving shrinks to Rs 1.20 lakh, still worth having.

Name the trade-offs before the client finds them. Located portfolios drift apart: the father's all-equity account will swing more and grow faster, so the household mix must be monitored at household level, and each spouse's individual finances look lopsided. If a per-person exemption on equity gains applies, the mother no longer uses hers. None of this outweighs a recurring saving, but each should be said out loud.