Jammu and Kashmir Government on 2 November suspended Syed Shahid Yousuf, son of Hizbul-Mujahideen chief Syed Salahuddin, from his agriculture department job.
Yousuf is under National Investigation Agency (NIA) scanner and was arrested last month in connection with a terror-funding case.
Yusuf was found to have been receiving and collecting funds through international wire money transfer from Saudi Arabia-based Hizbul Mujahideen member Aijaz Ahmed Bhat.
Bhat is wanted in India for funding terror activities in the Kashmir Valley.
The NIA already filed two charge sheets against six other accused in this case in 2011.
Out of these accused, two are in custody and others, including Salahuddin, are absconding and residing in Pakistan and Pakistan-occupied Kashmir (PoK).