On the back of a 370-run stand between Murali Vijay and Cheteshwar Pujara, India amassed a first innings total of 503 but it could have been so much more had Australia not done well in the middle session to claim 7-103.
Australia still trailed by 266 entering its second innings and now with David Warner out for 26 and Phil Hughes for a duck.
Opener Ed Cowan will resume on 26 and Shane Watson nine with Australia 2-74.
India looked capable of building a massive lead during a record 370-run partnership between Vijay and Pujara, but once they fell just before lunch the other batsmen weren’t able to get stuck in and have the same impact.
Both Vijay and Pujara fell in quick succession bringing an end to their partnership of 370. It was India's biggest ever second wicket partnership in Test history with Vijay out for 167 and then Pujara soon after for 204.
The damage had been, though, with India building on a big lead in reply to Australia's below par 9(dec)-237.
After lunch, Sachin Tendulkar fell for seven and then India lost its last six wickets for just 43 with MS Dhoni gone for 44, Ravindra Jadeja for 10, Ravi Ashwin for one, Harbhajan Singh without scoring, Virat Kohli for 34 and Bhuvneshwar Kumar for 10.
That left India all out for 503 with a first innings lead of 266 runs with seven sessions of the Test match remaining.
If Australia was hoping that some rest overnight freshened up their bowlers and perhaps relaxed the Indian pair a little they have been hugely disappointed on the morning of the third day's play.
Pujara and Vijay were relatively untroubled once again on Monday morning with the only close call being a tight LBW shout off Xavier Doherty to Pujara.
The pair went on to amass India's best ever second wicket partnership in Test cricket before Vijay was caught Ed Cowan at bat-pad handing Glenn Maxwell his first wicket.
Vijay was gone for 167 from 361 deliveries with 23 boundaries and two sixes.
The score was then 2-387 and just six runs and three overs later Pujara joined him for 204 when he was caught at fine-leg by Doherty off a good bouncer from James Pattinson. His 204 came off 341 balls with 30 fours and a six.
Shortly after lunch, Pattinson bowled a good ball to get Tendulkar out caught behind before Dhoni strode to the wicket looking for some quick runs. He made 44 before falling to Maxwell.
Jadeja was then caught and bowled by Maxwell before Doherty picked up the wickets of Ashwin, Harbhajan and Kumar, while Maxwell gained his fourth wicket by getting rid of Kohli to a good catch at leg slip by Cowan.
Australia's bowlers struggled overall despite a more encouraging finish to India's innings.
Doherty finished with the figures of 3-131 from 46.1 overs, Pattinson 2-80 from 29, Peter Siddle 1-92 from 31, Moises Henriques 0-45 from 21 and Maxwell 4-127 from 26 on debut.
Australia then started its innings with a deficit of 266 and it was a little shaky early with Cowan dropped twice by Kohli and Dhoni, but he and Warner fought hard.
They put on 56 for the first wicket and just when Warner was starting to look set including hitting a big six straight down the crowd that was caught by former Australian fast bowler and selector Merv Hughes.
However, Warner soon was bowled by Ashwin for 26 to leave Australia 1-56.
Phil Hughes then looked all at sea and faced just nine balls before also being bowled by Ashwin.
Cowan and Watson then survived until stumps and have a big job to do early on the fourth day with Australia still trailing by 192 runs.