"The artefacts, which were held by the National Gallery of Australia (Gallery), were purchased in good faith, but extensive research undertaken by the Gallery has led to its decision to voluntarily return these artefacts to India," the Australian Prime Minister's office said in a statement.
The artefacts being returned are a pair of door guard (dvarapala) 15th Century, Tamil Nadu, India - (two works); and the serpent king (Nagaraja) 6th to 8th Century, Rajasthan or Madhya Pradesh, India.
"Like India, we understand the value of our ancient cultures and artefacts," the Australian PM said.
"The return of these artefacts is the right thing to do. This is another demonstration of deep relationship between Australia and India."
Both India and Australia are party to the UNESCO 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transport of Ownership of Cultural Property.
"The strong ties Australian and Indian institutions have made in recent years have helped develop important professional relationships and share culture. The return of these artefacts also underscores the world's debt to India's magnificent culture, history and legacy," the Minister for Foreign Affairs Marise Payne said.
"Historic artefacts play a significant role in modern society by allowing communities to acknowledge and celebrate their shared history and culture. The National Gallery of Australia recognises this, and is strongly committed to the ethical collecting of cultural material and best practice collection management. I commend the Gallery for resolving these legacy issues," the Minister for Communications, Cyber Safety and the Arts Paul Fletcher MP said.
Criminal law proceedings are currently underway in India and the United States against former New York art dealer Mr Subhash Kapoor, from whom these artefacts were purchased. The Australian Government does not have any role in these proceedings.
( With inputs from IANS )