"The two Indians were released last night," Deputy Interior Minister Hill al-Din Hillal said on Wednesday.
He added that they were on their way to Kabul.
An Indian embassy official said the Afghan government had informed them the pair would be handed over later in the day.
The two were kidnapped on 6 December from a village near Shahjoy, 280km southwest of Kabul, in the heart of Zabul province.
Interior Minister Ali Ahmad Jalali had said last week Afghan officials were negotiating for the release of the Indians who were working for a firm, helping rebuild the Kabul-Kandahar highway.
The Taliban last week reportedly offered to free the two Indians in exchange for the release of 50 rebels held in Afghan jails.
Hillal denied the government had cut a deal to secure the Indians' freedom.
"The government has not released any Taliban fighters for their release. They have been released without any conditions," he said.
The abduction of the Indians followed the murder last month of a French UN worker in Ghazni province and the kidnap of Turkish road engineer Hasan Onal who was released by the Taliban after a month in captivity.
A Taliban spokesman had claimed Onal was freed after two fighters were released, but Afghan officials said he had been released without any conditions.