 Harbhajan Singh arrives for his ICC Code of Conduct appeal in Adelaide |
The India spinner had been found guilty of calling Symonds, Australia's only mixed-race player, a "monkey" during the second Test in Sydney last month.
But at an appeal hearing on Tuesday Harbhajan had his three-match ban lifted and was instead fined half his match fee for offensive behaviour.
The charge was downgraded to general abuse, governing body the ICC said.
"The racial abuse charges have been dropped," added Niranjan Shah, board secretary of the Board of Control for Cricket in India.
"It is finished. The punishment is only for using obscene language."
The appeal commissioner of governing body the International Cricket Council, New Zealand high court judge John Hansen, is due to hand down his ruling in Adelaide later on Tuesday.
India have now lifted a threat to pull out of the rest of their tour of Australia.
The original punishment of Harbhajan by match referee Mike Procter came after Australia captain Ricky Ponting made an official complaint about his alleged comments.
On-field umpires Mark Benson and Steve Bucknor levelled a charge under section 3.3 of the International Cricket Council code of conduct following Ponting's complaint.
At the time of the incident, Harbhajan was batting alongside Sachin Tendulkar, who backed his team-mate's claim that he had not called Symonds a "monkey".
In the aftermath of Procter's decision, India suspended the tour and later warned they might abandon it if Harbhajan's appeal failed.
They also accused Australia spinner Brad Hogg of making an offensive remark to India skipper Anil Kumble and his deputy Mahendra Dhoni.
They have since withdrawn their threat to quit the tour and the charge against Hogg.
Following Australia's 2-1 victory in the Test series, the sides next face each other in a Twenty20 match in Melbourne before playing in a triangular one-day tournament which also involves Sri Lanka.
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