The party stressed Islamabad should instead be pressurised to take credible action against terror groups operating from its soil.
"It is a political demand being made by BJP and its allies. You cannot declare a neighbouring State as a terror State," CPI national secretary D Raja told reporters on the Parliament premises.
The Rajya Sabha MP said India should rather question the policies of Islamabad and pressurise it to take "credible" action against terror outfits using its soil.
Against the backdrop of repeated terror attacks originating from Pakistan, RS member Rajeev Chandrasekhar had last Saturday moved in the Upper House a Private Members' Bill which sought to declare any such country as State sponsor of terrorism and provides for snapping all economic and trade relations with that nation.
While moving for consideration 'The Declaration of Countries as Sponsor of Terrorism Bill, 2016', the Independent member said it "seeks to call out states like Pakistan that continue to associate, promote, patronise and sponsor terrorism against our nation.