The decision was taken by the information and broadcasting ministry, the home ministry and the Central Board of Film Certification (CBFC) after watching the film.
"We saw the film and decided that it will not be released tomorrow (Friday)," CBFC chairperson Leela Samson said here after a review of the film and taking cognizance of the recommendations of the home ministry.
"Because of the law and order situation that might result from showing the film and based on the ministry of home affairs report, the home ministry, the CBFC and I and B officials have taken the decision," she added.
The home ministry had expressed reservations and serious concern over the contents of the film and asked the information and broadcasting ministry for a relook into the clearance granted to the film. It had conveyed to the information and broadcasting ministry that the film could impact communal harmony in Punjab and other northern states.
The home ministry had said that some content in the film was "highly objectionable" and could create enmity between communities and lead to communal tension.
The film is reportedly based on the lives of the assassins of Indira Gandhi and glorifies their act.
The Congress and Bharatiya Janata Party (BJP) have demanded a ban on the Punjabi film.