Gracias, 75, is survived by his wife Theresa and daughter Evelyn.
The former striker, who had also captained Maharashtra in the senior nationals and Tata Sports Club in major tournaments, had undergone a bypass surgery a couple of years ago.
He suffered a heart attack at his residence last evening and was rushed to a nearby hospital, but breathed his last on admission, the sources said.
Gracias had represented the country in a couple of international tournaments and his notable feat was a hat-trick in India's 4-0 win against Hong Kong in a league match of the 1967 Merdeka Cup in Kuala Lumpur, Malaysia.
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During his stint with Tata SC, Gracias led the team to triumphs in major tournaments, including the Rovers Cup and Bandodkar Trophy, and in local competitions - Harwood League and Nadkarni Cup.
He captained Maharashtra in the Santosh Trophy nationals, in which he had also represented Goa.
His funeral mass will take place tomorrow evening.