The 23-year-old law student has been arrested on allegations levelled by politician Swami Chinmayanand, whom she has earlier accused of raping and sexually exploiting her.
The woman, whose name has been withheld, has alleged that she was raped and physically exploited for over a year by Chinmayanand and that the politician forced her at gun-point on several occasions.
On Wednesday, a special investigation team of police, arrested the woman at her home in Uttar Pradesh.
The woman's arrest came a day after a local court in Shahjahanpur, near Lucknow, allowed her to request protection from arrest after a court in Allahabad had earlier refused a similar request.
Chinmayanand, the former central government minister, who runs several educational institutes, was arrested on Friday. But he was hospitalised soon after, complaining of health issues. Meanwhile, he filed an extortion case against the woman and her three male friends.
The woman was subsequently charged by police under various sections of the Indian Penal Code for extortion, criminal intimidation, and hiding evidence. She was taken into police custody after being medically examined at a hospital.
"We have enough evidences that Rs.5 crore (50 million rupees or over $700,000) extortion money was demanded from Chinmayanand. The one arrested said they sent messages to Chinmayanand in panic at the behest of the said woman, as they were not getting the money and were upset," Special Investigation Team (SIT) chief Naveen Arora told reporters.
Chinmayanand is the second leader of the governing nationalist BJP to be embroiled in a sexual exploitation case. A sitting legislator from Uttar Pradesh, Kuldeep Singh Sengar, is already in jail facing similar charges.