Offer to pay expenses incurred for engagement 

2) girl family to harass you may file false dowry harassment case against you 

3) in such a case apply for and obtain Anticipatory bail from sessions court 

Unfortunately, yes! They can give a false complaint against you and your family before the Police and thus lodge a false FIR.

Since the marriage isn't there, any other matrimonial cases are not possible.

To safeguard yourself, you can kind of settle the issue with them by reimbursing all the expenses which they had to bear for the engagement plus a little extra. Make sure to sign an Agreement/Settlement recording the terms of compromise.

regards,  

Don’t ask for return  of the gifts given to girl 

keep evidence handy that you have paid all expenses for engagement 

We are now asking them to take all the gifts they gave us and similarly return what we gifted to the girl.

The above is a fair demand from your side! 
Having said that, calling off the engagement is your call however, its social backlash will be suffered by both the families. Since its your decision which affects them, paying a little/notional compensation. to the girl's family should hurt you. 

You cannot stop girl side from filing false cases if they chose to file. Mere engagement does not create any legal right. Keep your self separate and distinct to safe guard other. 

Hope you were not physically engaged with the girl, otherwise serious issue.

Other than that maximum she can file complaint of dowry demand. To safe guard, start showing your intention via as proof that actual reason of break up is incompatibility. 

Yes if any fake cases are filed you need to take steps to secure you from it by taking anticipatory bail. No one can force you to get married. It’s better you do the exchange in video camera to support evidence 

If you want cancelling your marriage after the engagement, it’s important to remember that the engagement is like an agreement instead of a final contract. Therefore, any party to the engagement has right to repudiate it on a valid ground. 

Cancellation of the engagement is possible on valid grounds, and the aggrieved party is entitled to compensation and recovery of expenses incurred in the engagement ceremony. Be prepared to pay expenses and return all gifts received.

Communicate clearly with the other party and their family.

If the cancellation is due to dowry demands, the guilty party is liable under the Dowry Prohibition Act. You said that your fiancé’s family is making false allegation of dowry. If you prove that the alleged allegation of dowry demand is false, then your fiancé’s family is not entitled to get compensation in lieu of cancellation of engagement.

If you are threatened with false charges of dowry or harassment, document these threats for possible legal action.

When they lodge FIR against you for demand of dowry then approach the High Court for the quashing of that FIR. Evidence of threatening will further empower the court to quash the FIR.

You can return all their gifts and and can ask them to return yours, if they agree. 

 Most important is that you communicate yor decision to call off the engagement  for the reasons you rely upon.

But make sure that you don't hurt them by yor words because it may provoke them and they may go for false cases agaisnt you in retaliation.

- As per section 65 of Indian Contract Act, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.

- Further as per section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him.

- Further, the party who broke the contract due to mistakes of other party will have also bear the consequences for breaching the contract as well. 

-  Further, breach of promise to marry also attracts an offence of cheating under S. 415 of the Indian Penal Code, if the intention was not to marry at the time of engagement.  

- Since, you have broke the engagement due to the concealment of the facts by the girl , hence you are not responsible for the same , and the bride family will have to prove the existence of promise of marry. 

- Further, your intention was very much to marry with that girl and not to cheat the bride family , by this way you have not committed any offence legally. 

- Better to just return the gift , ring etc received at the time of engagement immediately , and further you are not responsible to pay the cost of engagement legally. 

Dear Client,

Maintain Clear Communication: Communicate your decision to break off the engagement clearly and respectfully to the girl's family. This can help minimize misunderstandings and misinterpretations.

Document Everything: Keep records of all communication and interactions related to the engagement, including text messages, emails, and any evidence of mutual agreement about the incompatibility.

Avoid Any Unlawful Actions: Ensure that your actions remain lawful and respectful throughout the process. Do not engage in any activities that could be interpreted as harassment, threats, or any other form of misconduct.

Involve a Mediator: If the situation becomes contentious, you might consider involving a mediator to facilitate a peaceful resolution and avoid unnecessary legal disputes.

They may file a case against you but that is just a possibility. Don't marry her if you aren't ready.

They may lodge an fir against you that you broke up because you demanded dowry which they refused to give. If that is the case you may present your case before the police. Engage a competent lawyer.

Yeah I understand. But you may never know if they will file a case or not. Anyways try to end this in a peaceful way.