Mr Kaskar was produced before the holiday court in Thane which sent him to judicial custody.
He was arrested by the crime branch of Thane Police on September 18.
Mr Kaskar was taken into custody from his house in Nagpada area in Central Mumbai by a team led by encounter specialist and the anti-extortion cell's senior police inspector Pradeep Sharma after a complaint was filed against him by a builder, who was facing extortion threats since 2013.
He is accused of issuing threats in the name of Dawood Ibrahim and demanding huge extortion money from businessmen.
A case was filed under sections 384 (punishment for extortion), 386 (extortion by putting person in fear of death or grievous hurt), 34 (acts done by several persons in furtherance of common intention) of the IPC at Kasarvadavali Police Station.
Mr Kaskar, who was deported from the United Arab Emirates in 2003, is said to be operating his brother's real estate business in the city.