The council ordered the horrific penalty to be carried out in a village in West Bengal state on Tuesday night after the 20-year-old woman was discovered with a man from another community, a senior officer said.
Police have arrested 12 people over the attack which was meted out after the woman's parents said they could not pay the fine of 25,000 rupees (400 dollars) imposed by the council for having the affair.
"The girl was gang-raped for having an affair with a youth of another community and failing to pay the fine which was imposed by the village council," district police superintendent C. Sudhakar told AFP.
"We have so far arrested 12 people in connection with the incident."
The attack again casts India's record on sexual violence back into the spotlight after national outrage over the fatal gang-rape of a student in New Delhi in December 2012.
AFP