The election commission decides to hold the release of the biopic movie based on Prime Minister Narendra Modi.
Mr Modi's ruling Bharatiya Janata Party (BJP) had said earlier stopping its release would be against freedom of expression. Its trailer released last month brought a furious reaction from the opposition.
The Election commission said the film, which contains fictional elements, have a "serious threat" to ensuring all candidates get equal opportunity for an election campaign.
It said such biopic "may create an impression of the truthfulness of content" and could therefore not be displayed on any electronic media or at the cinema.
It also said that posters or publicity material for the film that depicted any of the candidates also had to be removed.
The EC decision comes despite India's censor board clearing the big budget movie for release with "four or five minor changes".
The BJP said it was not involved, but lead actor Vivek Oberoi is a noted Modi supporter