Siddle bowled five overs during his team's 24-run win in the fourth match in Mohali on Monday before experiencing stiffness near his left rib cage.
Team physiotherapist Kevin Sims said Siddle's injury was not serious but he was told to leave the tour because he was unlikely to be available for the last three games of the seven-match series.
"With this in mind, we have made the decision that Peter will return to Australia, where he will be reviewed by Cricket Australia medical staff to ensure he is available for selection at the beginning of the Australian summer," Sims said.
A statement from Cricket Australia said selectors were "discussing the possibility" of a replacement for the rest of the series.
India and Australia are tied 2-2 with the fifth match to be played in Hyderabad on Thursday.
Source: AFP Global Edition