What is Asset Location and why does it matter for tax efficiency?

Asset Location means placing assets in accounts where they are taxed most favorably. Equity funds (lower tax, benefit from long-term holding) should go in regular taxable accounts. Fixed income instruments taxed at slab rate (FD, bonds) are better held in tax-advantaged accounts (PPF, EPF, NPS). Proper location can add 0.5-1% in annual after-tax returns.