Receiving the money is not owning it
This is the point everyone misses. If the account was held either-or-survivor or former-or-survivor, the surviving holder can go on operating it and receive the balance on the death of the other holder, without a succession certificate. A nominee can be paid the same way. That is a genuine convenience, the bank does not need a court order to release the money.
But it settles only who the bank can safely pay, not who owns the money. The Supreme Court in Ram Chander Talwar v Devender Kumar Talwar held that a nominee under Banking Regulation Act Section 45ZA receives the deposit but does not become its owner; the money forms part of the deceased's estate and devolves by the rules of succession. The same logic applies to a surviving joint holder for the deceased's share. So if you are the survivor or nominee, you receive the balance, but you hold the deceased's share in trust for whoever inherits it under the will or the law.
Why it matters when there are other heirs
Where you are the only heir, this is academic, the money is yours anyway. It bites when there are others, a sibling, another child, a second parent. Suppose a father names one son as nominee on his account; that son can collect the balance, but the funds still belong to the father's estate, to be shared among all his heirs under the will or by intestate succession. The nominee son is not entitled to keep the lot simply because his name was on the account.
Banks now follow this expressly. Under the RBI's 2025 directions on settling deceased-customer claims, a bank paying a nominee or survivor records that the payment is made in trust for the legal heirs, not as a decision on who inherits. So treating survivorship or nomination as ownership is exactly the assumption the law and the bank both reject. Where heirs are more than one, the clean course is to distribute the deceased's share as the succession requires, which a CA and, where needed, a lawyer help you document.
The tax on the interest
There is no tax on the inheritance itself, India has no inheritance or estate tax, so receiving the balance is not taxable. What is taxable is the interest the money earns, and the death splits it.
Interest credited up to the date of death is the deceased's income, reported in their final return filed by the legal representative under Section 159. Interest credited after the death belongs to the heirs, in proportion to their shares, and each reports their part. A common real-world mismatch is that the bank keeps deducting TDS on the deceased's PAN until the account is settled, so the credit sits on a dead PAN while the income belongs to the heirs, which has to be reconciled on the returns. A practising CA files the deceased's final return, splits the post-death interest to the right heirs, and sorts out the misdirected TDS.