Kasthuri Munirathinam, 58, was employed by a Saudi household in Riyadh three months ago, her sister S. Vijayakumari told CNN on the phone from the southern Indian state of Tamil Nadu.
Vijayakumari said the family was told about the attack on September 30.
According to Vijayakumari, Munirathinam's employer cut off her arm after she told local police that she was being mistreated, not being paid and not given enough food.
The Indian government has complained to Saudi Arabia about the incident.
India: We will seek justice
"We are aware of the plight of Ms. Kasthuri Munirathinam, a domestic help who has suffered serious injuries allegedly inflicted by her Saudi Arabian sponsor," Indian external affairs spokesman Vikas Swarup said in a statement Thursday night.
New Delhi demanded that Riyadh order an independent investigation of the incident.
Munirathinam is being treated at a Saudi hospital, the External Affairs Ministry statement said.
India also called for Saudi authorities to charge the employer with attempted murder.
"This is a very unfortunate and most condemnable incident. Our embassy in Riyadh has taken up the matter with the Saudi Foreign Office and asked for strict action in the matter and severe punishment for the sponsor," Swarup said.
"We will continue to seek justice for the victim," he added.
Indian External Affairs Minister Sushma Swaraj called the alleged attack "brutal."
CNN contacted the Saudi ambassador in New Delhi, Saud bin Mohammed AlSati, for comment on the case. He refused to discuss the matter over the phone and advised CNN to seek a formal appointment. CNN has requested an appointment.
Saudi Arabia's poor track record on migrant workers
Saudi Arabia has come under harsh criticism for the treatment of domestic workers in the kingdom, as frequent reports emerge about the abuse of maids
working in vulnerable domestic environments.
And last month, a Saudi diplomat working in his country's embassy in New Delhi left India after being accused of sexually assaulting
-- and facilitating gang rapes -- of two Nepali domestic helpers who worked for him.
Two Indonesian maids were executed by beheading in Saudi Arabia earlier this year, after murder convictions that were questioned by rights groups.
Sri Lanka also placed limits on the number of women working in Saudi Arabia as maids
after the beheading of a woman convicted of killing her employer's infant son while only 17.