Modi's right-wing government has launched a massive crackdown on non-governmental organisations
A home ministry official told AFP Caritas had violated India's foreign funding laws by financing groups that were working "against the country".
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He said Caritas had been placed on a list of organisations needing prior government approval to receive or distribute funds in India, a move also reported by the Indian Express daily.
"There was clear violation of foreign funding law," said the official, who asked not to be named, citing funding for groups which protested against a nuclear plant in the southern state of Tamil Nadu.
The right-wing government of Prime Minister Narendra Modi has launched a massive crackdown on non-governmental organisations, cancelling the foreign funding licences of nearly 9,000 charities in recent months.
It has also frozen the domestic and international bank accounts of Greenpeace India, although the domestic accounts were recently unfrozen on the orders of a court.
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In April it placed the Ford Foundation, an American charitable organisation, on the same watch list as Caritas, saying it was funding groups which acted against the national interest.
No one at Caritas India was immediately available for comment.
The group has been operating in India for more than 50 years and works on health, education and poverty-related issues.
Modi's nationalist government, in power since last year, views foreign-backed aid organisations with suspicion.
The prime minister has criticised what he calls "five-star activists" and a government intelligence report last year reportedly said they were working with foreign powers to undermine India's economic growth.
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