Terming the action by China as "surprising", External Affairs Ministry said it had expected China would have been more understanding of the danger posed to all by terrorism and would join India and others in fighting the common challenge of terrorism.
"We note with concern China's decision to block the proposal to list Masood Azhar," India said, asserting that its proposal, submitted to the 15-member 1267 Sanctions Committee of the UN Security Council in February, received the strong backing of all other members of the Committee.
China had twice imposed "technical hold" on the Indian proposal since its submission.
However, India said it will continue to push forward with resolute determination "through the use of all options available with us to bring perpetrators of terrorist violence to justice".
"The international community is aware that the Pakistan- based Jaish-e-Mohammed which is proscribed by the UN, has been responsible for innumerable terrorist attacks on India including the Pathankot air base attack.
The decision by Beijing is "surprising" as China itself has been affected by the scourge of terrorism and has declared opposition to all forms of terrorism, the Spokesperson added.
"As a consequence of this decision, the UN Security Council has again been prevented from acting against the leader of a listed terrorist organisation. We had expected China would have been more understanding of the danger posed to all by terrorism and would join India and others in fighting the common challenge of terrorism," he added.
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