Australia displaced India from the top of the Test rankings after their 4-0 drubbing of England in the recently-concluded Ashes series, even as the Virat Kohli-led side squandered a 1-0 lead to go down against South Africa.
After suffering a 1-2 series loss in South Africa, India dropped to the third spot while inaugural World Test Championship (WTC) winners New Zealand held onto their second position after a 1-1 drawn series at home against Bangladesh, which included the hosts' first ever loss to Bangladesh at home across formats.
South Africa's 2-1 win over India at home took them one spot up to fifth place, while England were in fourth position after a disastrous Ashes campaign Down Under.
India lost the top spot by losing the second and third Tests after winning the first in Centurion.
Australia, with 119 points, are three ahead of India in the rankings.
Overall, India played 14 Tests in 2021 and managed to win eight out of them.
They lost three Tests last year, including the heart-breaking defeat in the World Test Championship (WTC) final against New Zealand.
Pakistan went down one spot to sixth, while Sri Lanka, West Indies, Bangladesh, Zimbabwe, Afghanistan and Ireland retained their positions.
The South Africa tour was Kohli's final assignment as India Test captain as he stepped down following the series defeat.
Before the T20 World Cup last year, Kohli announced his decision to quit as India's T20I captain and in December, he was replaced as the ODI skipper too, by Rohit Sharma.