Mahindra Racing said they have relieved Sarath from his contractual obligations since he would not participate in the remainder of the 2012 season of the Italian Championship.
Mahindra is the first team from India to participate in the Italian Championship.
"This has been a very tough decision for me. Racing is my passion but I have to fulfil certain personal commitments in Chennai. I have therefore decided to take a break from the Italian Championship and focus on my family," Sarath said through a press release.
"It's been a great learning experience being part of the Mahindra Racing team for the Italian Championships. I am really grateful to Mahindra for supporting me by way of a financial grant and for giving me the opportunity to compete internationally. I look forward to returning to the circuit soon," he said.
Sarath is also the first Indian to participate in the MotoGP 125CC World Championship. He was the 2010 National Champion of India in the 165CC Expert Class and the 2008 National Champion in the130 cc 4-stroke novice class.
He was the first Indian to secure a podium at an international motorsports event when he competed in Monza as part of the Mahindra Racing team.