India halted the agreement following an April attack on civilians which it accused Pakistan of backing, a charge denied by Islamabad and one which was followed by days of fighting between the two foes.
Despite a ceasefire holding, India's interior minister said his government would not restore the treaty which governs river water critical to parched Pakistan.
"It will never be restored," interior minister Amit Shah told the Times of India.
"We will take the water that was flowing to Pakistan to Rajasthan (state) by constructing a canal. Pakistan will be starved of water that it has been getting unjustifiably," he added.
The 1960 Indus Water Treaty gave India and Pakistan three Himalayan rivers each and the right to hydropower and irrigation resources.
It established the India-Pakistan Indus Commission, which is supposed to resolve any problems that arise.
Islamabad last month said the treaty was a "no-go area", after New Delhi announced it would maintain its suspension following the ceasefire.
"The treaty can't be amended, nor can it be terminated by any party unless both agree," Pakistani Foreign Minister Ishaq Dar said.
Halting the water agreement was one of a series of tit-for-tat diplomatic measures taken by both countries in the immediate aftermath of the Kashmir attack.
New Delhi has not made public any evidence of Islamabad's alleged involvement in the April 22 killing by gunmen of mostly Indian tourists.
During the four days of fighting which followed in May, more than 70 people were killed in missile, drone and artillery fire. It was the worst standoff between the nuclear-armed neighbours since 1999.
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