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Sharma was brought to the SIT's office in the State Reserve Police headquarters in Hadapsar locality under tight security. Mediapersons are not being allowed into the campus.
Sharma will be produced before a court on Tuesday where the SIT would press for police custody.
Earlier, the SIT had searched his official residence in south Mumbai.
Noted social worker and anti-corruption crusader Anna Hazare said the thread of investigation in the racket 'seems to be heading towards Mantralaya'.
Sharma's arrest shows the Special Investigating Team under retired DGP S S Puri and DIG Subodh Jaiswal is doing a commendable job, he told reporters in Pune.
"That so many high ranking police officers are getting arrested is a pointer to the sorry state of affairs in the Maharashtra government. It raises many pertinent questions as to how Sharma got a promotion when he was an accused in the case," he said.
It was Hazare's public interest litigation (PIL) that prompted the Mumbai high court to appoint Puri to investigate the allegations of police complicity in the racket.
"The SIT investigation indicates how a tough and honest policeman can help in unravelling the truth and restore the confidence of the people in the functioning of the police department," Hazare added.
