"I am ready to go to jail ... I believe in whatever I have said"
Varun Gandhi, BJP candidate
During a speech by Gandhi, which was aired on television, he is seen apparently making offensive remarks against Muslims.
Criminal charges were filed against him after the election commission reviewed the footage.
Gandhi has said footage of his speech was doctored in a political conspiracy to tarnish his image.
"I am ready to go to jail. And I have come here to boost the morale of my people," Gandhi said before his arrest.
"I believe in whatever I have said."
The BJP has been accused in the past of stoking tensions to appeal to its large Hindu voter base. Muslims make up around 13 per cent of India's 1.1 billion population.
Many opinion polls show the BJP-led main opposition alliance trailing the Congress-led ruling coalition.
Varun Gandhi is the son of Sanjay Gandhi, Indira Gandhi's younger son who was killed in a plane crash.
Although he is a descendant of the influential Nehru-Gandhi dynasty, Varun Gandhi belongs to a side of the family that has disowned them.
Three out of India's 14 prime ministers belong to the Nehru-Gandhi family, including the first, Jawaharlal Nehru.