Kasthuri Munirathinam's family said her arm was chopped off by her employer.
Riyadh police on Friday said that an Indian woman lost her arm due to a fall from a building and not because of an attack by her Saudi employer as was reported in India and elsewhere.
According to media reports earlier this month, Kasthuri Munirathinam, 58, was allegedly attacked by her employer, for whom she worked as a domestic help.
The incident was widely condemned including by India's External Affairs Minister Sushma Swaraj.
"Chopping of hand of Indian lady - we are very much disturbed over the brutal manner in which Indian lady has been treated in Saudi Arabia," the minister tweeted.
In a statement, Riyadh police said the woman made a rope ladder out of cloth in order to escape from the window of her employer's apartment on the third floor of the building.
However, she lost her balance and fell down, hitting the edge of an electricity generator located in the lower part of the house. This resulted in her arm being severed, police said.
Kasthuri arrived in Saudi Arabia nearly two months ago. She was "suffering from mental disturbances" and therefore tried to flee the employer's house, the statement added.
The spokesman rejected "false and differing reports" in various media outlets about the woman, stressing that all people in Saudi Arabia are equal and enjoy all their rights guaranteed by the law.