He said Akhtar was carrying maps that showed the deployment of India's Border Security Forces (BSF) and army soldiers
New Delhi police said the official had been recruiting Indian nationals for two and a half years to spy for Pakistan's powerful Inter-Services Intelligence (ISI) in return for cash.
"Delhi police crime branch has busted an espionage racket run by a kingpin working in the Pakistan high commission," said Ravindra Yadav, joint commissioner of police on crime.
The official, named as Mehmood Akhtar, was detained on Wednesday with documents in his possession on Indian troop deployment along the border, Yadav told a press conference in Delhi.
"They used to meet once in a month at a pre-decided place to exchange documents and money," he said.
Akhtar was later released, he added.
India's foreign secretary Subrahmanyam Jaishankar summoned Pakistan's high commissioner to inform him of the decision to expel the official within 48 hours.
"FS (foreign secretary) summons Pak High Commissioner to convey that Pak High Commission staffer has been declared persona non grata for espionage activities," Indian foreign ministry spokesman Vikas Swarup said on Twitter.
Tensions between India and Pakistan have soared since a raid last month on an Indian army base near the de-facto border dividing Kashmir killed 19 soldiers, the worst such attack in more than a decade.
India blamed militants in Pakistan and said it had responded by carrying out strikes across the heavily-militarised border, although Islamabad denies these took place.
Indian and Pakistani troops regularly exchange fire across the border known as the Line of Control in Kashmir, but sending ground troops over the line is rare.
Yadav said two Indian nationals from the northern state of Rajasthan were also arrested, and that Akhtar had planned to meet his Indian co-conspirators at the Delhi zoo to exchange the information and cash.
He said Akhtar was carrying maps that showed the deployment of India's Border Security Forces (BSF) and army soldiers.
"A list of jawans (soldiers) posted at the border along with soldiers who had retired from service was also recovered," Yadav said.
Pakistan's High Commissioner Abdul Basit lodged a "strong protest" on Thursday with the Indian foreign ministry and said the detention of the official contravened diplomatic conventions, a Pakistani diplomatic source said.
"The High Commissioner denied the accusation and said we (the commission) never engage in activity that is incompatible with its diplomatic status," the source told AFP on condition of anonymity.
The official has been given 48 hours to leave the country, the source said.
The expulsion comes as an Indian soldier died on Thursday from injuries he received during an exchange of fire with Pakistani soldiers across the border.
"A BSF jawan (soldier) was killed today by splinter injuries he received during cross border firing from Pakistan," Indian BSF officer Manoj Kumar told AFP.
Such firings have increased in recent months as relations between the rivals have plummeted.
Indian Prime Minister Narendra Modi has warned Pakistan since the army base attack that India would push to make it a pariah state, accusing it of being a "mothership of terrorism".
Tensions were already high before the attack, with deadly violence in Kashmir over the death on July 8 of a popular militant leader.
Nearly 90 people, most of them young protesters, have been killed in clashes with security forces in Indian-administered Kashmir.
Kashmir has been divided between India and Pakistan since their independence from Britain in 1947. Both claim the territory in full and have fought two wars over the mountainous region.