The party's decision was announced by its national vice president Vinay Sahastrabuddhe at the Delhi BJP office.
"There is no place in the BJP for criminal elements of the Aam Aadmi Party against whom there is a serious allegation of rape and exploitation of women... The party will not tolerate any kind of association or connivance with any such element from AAP," he said.
BJP leader Shazia Ilmi also echoed Mr Sahastrabuddhe's words.
"Because of Kumar, Khatri had to pay," she said.
Yesterday, AAP legislator Alka Lamba criticised the BJP and accused them of "inviting" Sandeep Kumar to campaign for Ms Khatri.
"The BJP has been defaming AAP by taking Kumar's name on radio. Now, they are even using him in their campaign," she alleged.
The charge was vehemently opposed by the BJP which, in turn, accused the AAP of hatching a "conspiracy" against the party.
Sandeep Kumar was sacked from the Arvind Kejriwal-led AAP government in Delhi over a sex tape, which purportedly featured him. Recently, a video clip went viral wherein Mr Kumar is supposedly seen criticising Mr Kejriwal.
The crucial polls for the three municipal bodies in Delhi - North Corporation, East Corporation and South Corporation - will take place on April 23.
(with inputs from PTI)