"He is still being questioned and senior officials from the Pakistan High Commission have already visited our office," an official of DRI said.
Rahat was detained at New Delhi's Indira Gandhi International Airport Sunday on his way back to Pakistan after attending concerts and award functions in India. More than $100,000 were recovered from the 15-member troupe.
According to the official, senior DRI officials questioned the popular singer till late last night but have not charged him yet.
Rahat, the nephew of legendary singer Nusrat Fateh Ali Khan, is popular both in India and Pakistan.
Several of his hit songs from Indian films are a rage on both sides of the border, for which he has won several awards, including the recent Filmfare award for "Dil to Bacha Hai Jee". He was also a judge on the Indian music reality show "Chhote Ustad".
Pakistan has initiated hectic efforts to secure the release of singer. Pakistani Foreign Secretary Salman Bashir called Indian High Commissioner in Islamabad Sharat Sabarwal and discussed the matter around midnight Sunday. He requested the Indian envoy to ensure that "no official should misbehave with Rahat during interrogation".