The son of a member of the Pakistani High Commission in Delhi who alleges he was abducted there made up the story, the Indian government says.
The Pakistan High Commission says it found a threatening note
On Wednesday Pakistan's information minister accused Indian intelligence agencies of kidnapping Roshan Ali.
But the Indian foreign ministry says there was no report to the police of the incident.
Mr Ali, 19, was blindfolded, handcuffed and subjected to a bizarre photo session with corpses, Pakistan said.
The long-time rival nations have frequently complained of embassy harassments, although these have become rarer since a peace process began two years ago.
The Pakistan foreign ministry said Mr Ali's kidnappers had taken him to a room and smeared him with blood taken from corpses in the room.
Pakistan officials also said they had found a note in Mr Ali's pocket addressed to his father saying the teenager should leave Delhi immediately as the kidnappers had photographs that could incriminate him.
But the Indian government says its police investigation shows that the note was written by a college friend of Mr Ali's, Rahul Sharma.
"Rahul Sharma's statement, and the absence of any corroborative report on the alleged abduction, clearly establishes that Roshan Ali's story is fabricated," the Indian foreign ministry statement said.
There has been no official reaction from the Pakistani side to the Indian statement.