The unnamed official said the payment, partly in rupees and the rest in dollars or euros, will be made in at least three installments and that the modalities and the routes were being worked out, the Press Trust of India reported.
The debt is related to Indias purchases of the Iranian oil, with the money partly accumulated in a bank account because Western sanctions prevent it from being transferred to the Islamic Republic.
New Delhi is paying 45% of the debt in rupees through the UCO Bank in the form of goods and commodities which it sells to Iran.
The rest of the dues in dollars and euros are stuck in a bank account because of the sanctions. Payments in euro through Turkeys Halkbank were halted in February 2013 under US pressures, leading to the current debt.
A limited payment channel opened after preliminary nuclear accord between Iran and the West in November 2013 led to the transfer of about $3 billion to Tehran.
For new payments in rupees, Iran will open a new account with a separate Indian bank because Tehran wants the settlement to be made to an interest-bearing account, the PTI quoted the official as saying.
The current account with the UCO Bank, it said, is a non-interest bearing account.
The news agency also quoted Indian Finance Secretary Rajiv Mehrishi as saying that New Delhi wanted to pay the debt in tranches and not in one single bullet of $6.5 billion.
Mehrishi visited Tehran last month along with representatives of the Reserve Bank of India to discuss the repayment of the debt.
Earlier this week, Indian media said Mehrishi had asked the countrys refiners to prepare $1.4 billion for payment to Iran in two installments of $700 million.
The report said the Indian Finance Ministry was seeking clearance from the US Treasury Department to go ahead with the repayment.
By Press TV
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