Sabi Giri, a naval officer from India, joined the navy in 2010, serving in the INS Eksila base.
Late last year, she chose to undergo Gender Confirmation Surgery after coming out as a transgender woman, but received a shock when she returned to work.
Giri alleges that she was confined to a psychiatric ward for six months which she told the BBC was "like being in jail". She also alleges that she was placed in a male-only ward.
After this, she rejoined the navy in April this year, only to receive an unexpected notice of dismissal on the 6th of October.
While the Indian navy refused to respond to the allegations, they did say in a statement that their "rules and regulations do not permit the sailor's continued employment" because of "irreversible gender reassignment".
"The individual chose to undergo irreversible gender reassignment on his own accord, whilst on leave wilfully altering his gender status from the one he was recruited for at the time of his induction," reads the statement.
Giri has confirmed to media that she will be appealing to the military court for unfair dismissal.
"I am not a criminal, I have done nothing wrong, I have only revealed my true identity," Giri told the BBC.
“They selected me because of my potential and my talent right?" she told The News Minute. "If I still have the courage to pull the trigger to shoot an enemy, if I still have the skill to do my job, why is my gender a problem?”
Giri's story has sparked a wide debate on transgender rights in India, a country which has legally recognised and protected trans people as a 'third gender' since 2014, but still arrests trans people who have consensual gay sex. A 153-year-old colonial-era law still stands in India, declaring that a same-sex relationship is an "unnatural offence" - it holds a 10-year jail term.