Bhullar, who is suffering from acute depression and was reported to be mentally unstable, was admitted to the psychiatry ward of Guru Nanak Dev Hospital in Amritsar where he was shifted in June last year from New Delhi.
He was admitted in New Delhi's Institute of Human Behaviour and Allied Sciences for treatment for the past few years.
District authorities in Amritsar confirmed that Bhullar's parole orders had been received.
Bhullar, a Khalistani terrorist, was convicted in the assassination attempt of former Indian Youth Congress president Maninderjit Singh Bitta in New Delhi in which several people died in September 1993. He was transferred to the Amritsar prison from New Delhi in June last year.
His name was linked to terrorist activities in Punjab in the early 1990s.
Bhullar had spent over 20 years in jail and there were demands from his family and radical Sikh organisations to release him on humanitarian grounds as he was mentally not stable.