Bhupati is reported to have asked the actress to marry him on a visit to the US, reports the Hindustan Times.
Dutta revealed: "He did it over a candlelit dinner and took me completely by surprise. I couldn't believe that he had picked the stone and designed the ring all by himself."
Bhupati also confirmed the news on his Twitter page, writing: "So Lara and me got engaged in NY last week."
The former Miss Universe had faced accusations of being responsible for the break-up of Bhupati's first marriage.
The actress, who last appeared on screen in Housefull, has previously been linked to actors Dino Morea and model Kelly Dorji.
