The sturdy Afghans never looked back after Mustafa Azadzoy put them ahead in the ninth minute of the fast-paced final, with Sandjar Ahmadi extending the lead in the 62nd minute.
An estimated 5,000 fans at the Dasarath Rangashala stadium in the Nepalese capital were treated to attacking football in a repeat of the previous final in 2011 in New Delhi between the same teams.
The Afghans had publicly spoken about their intention to seek revenge for the humiliating 4-0 loss to India in that final.
Led by coach Yousef Kargar, the Afghan squad accomplished their mission and danced on the field with their nation's flag held aloft, before doing a lap of honour in front of an appreciative crowd.
"You can't imagine how big this moment is for our country, our fans, our team and me," Kargar said. "This was an important game for us, and not just because we wanted to take revenge.
"We have proved that we belong in the world of football," he continued. "Our team has improved a lot over the last few years and I am sure we will get better in the years to come."
India responded with quick strikes of their own through Robin Singh and the Japanese-born Arata Izumi, both of which were thwarted by Afghan goalkeeper Mansur Faqiryar.
A surprise move by India's Dutch coach Wim Koevermans to bench star striker Sunil Chettri until the 60th minute cost the defending champions dearly as several chances went begging.
Afghanistan took advantage of their fumbling rivals as Ahmadi made it 2-0 in the 62nd minute, chipping the ball out of the reach of the outstretched Indian goalkeeper Subrata Paul.
Koevermans rued the lack of missed opportunities by his players, who, he said, had a good tournament despite the loss in the final.
"I am proud of my players because they played really good," the Dutchman said. "We actually dominated the whole game and created a lot of chances, but unfortunately could not score.
"Afghanistan is a vastly improved side and has some quality players," Koevermans said. "But we too are not lagging behind in any way. We will come back strongly."
Sri Lanka, Pakistan, Bhutan, Bangladesh, Maldives and hosts Nepal were the other teams in the tournament, regarded as the symbol of football supremacy in South Asia.