The boat left India last month and Australia said it had been "disabled" when it was intercepted outside Canberra's migration zone.
The asylum-seekers, including children, have since been held in limbo on board an Australian customs ship while their legal status is determined.
Immigration Minister Scott Morrison said they would be taken to the mainland -- the first boatpeople to arrive in Australia in seven months -- where Indian consular officials would determine their identities.
"I have been pleased to consent to the passengers being returned to Australia for the purpose of allowing Indian officials to determine identities and arrange where possible for the return of any persons to India," he said."It is our intention those who can be returned should and must be returned," he added, saying India had agreed to take back any of its citizens and would also consider taking Sri Lankan nationals who were Indian residents.
He ruled out any of them being resettled in Australia, in line with Canberra's hardline immigration policies, while Prime Minister Tony Abbott added: "I would certainly expect a very large number of people on that boat to go back to their country of origin."
Any boatpeople who arrived in Australia after July 19, 2013 cannot be resettled in the country, regardless of whether they are genuine refugees. They are instead sent to detention facilities or resettled on islands in the Pacific.
Asked what would happen to those on the boat who were neither Indian nationals nor residents, Morrison replied: "These are matters to be determined."
Lawyers have been seeking a court order that prevents those on board being sent to either Sri Lanka, Nauru, or Papua New Guinea.