Banerjee, 49, was killed outside her home in Paktika province. She was married to Afghan businessman Jaanbaz Khan and recently moved back to Afghanistan to live with him.
Taliban militants arrived at her home in the provincial capital of Kharana, tied up her husband and other members of the family, took Banerjee out and shot her, police were quoted as saying by BBC. The militants dumped Banerjee's body near a religious school, police said.
A senior police official said Banerjee, also known as Sayed Kamala, was working as a health worker in Paktika and had been filming the lives of local women as part of her work. No group claimed responsibility for the attack.
Banerjee's book "Kabuliwalar Bangali Bou" (A Kabuliwala's Bengali Wife), about her escape from the Taliban in 1995, became a bestseller in India and was made into the Bollywood film "Escape From Taliban" in 2003.
The memoir focussed on her life in Afghanistan with her husband and her escape from the militants. The film based on the book starred actress Manisha Koirala and was billed as a "story of a woman who dares (the) Taliban"
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