"I think there is some confusion. First, it is not a case of pardon. More importantly, it is not Sarabjit. It is Surjeet Singh, son of Sucha Singh. His death sentence was commuted in 1989 by President (Ghulam) Ishaq (Khan) on the advice of (then premier) Benazir Bhutto," presidential spokesman Farhatullah Babar told PTI.
Law Minister Farooq Naek on Tuesday conveyed to the Interior Ministry that Surjeet Singh had completed his life term in jail and ought to be released and sent back to India, Babar said.
"Keeping him in jail any longer will be illegal confinement," he added.
Any references to Pakistan President Asif Ali Zardari in the entire matter were "out of context", the presidential spokesman said.
Surjeet Singh, currently being held in Kot Lakhpat Jail in Lahore, has been in Pakistani captivity for over 30 years.
He was captured near the border with India on charges of spying during the era of military ruler Zia-ul-Haq.
Earlier in the day, Pakistani news channels had reported that President Zardari had converted Sarabjit Singh's death sentence to life imprisonment and directed authorities to release him if he had completed his prison term.
Official sources too had said that steps had been initiated for Sarabjit's release.
In New Delhi, External Affairs Minister SM Krishna had thanked Zardari for the steps purportedly taken for Sarabjit's release.
Sarabjit, 49, too is currently being held at Kot Lakhpat Jail in Lahore and has been on death row for over 20 years. He was convicted and sentenced to death for alleged involvement in a string of bombings in Punjab in 1990 that killed 14 people. He had sent a fresh clemency appeal to President Zardari last month.
Though Sarabjit was set to be hanged in 2008, Pakistani authorities put off his execution indefinitely after former premier Yousuf Raza Gilani intervened.
His family has said he wandered across the border in an inebriated condition and was arrested by Pakistani authorities.
A little over a month ago, ailing Pakistani virologist Khalil Chishti, detained in Rajasthan for nearly two decades on the charge of involvement in a murder, was freed on the orders of India's Supreme Court so that he could meet his family in Karachi.