Read was given three penalty points under the England and Wales Cricket Board (ECB)'s disciplinary code for breaching provisions relating to the use of obscene or insulting language towards another player.
The sanction followed an incident during a county championship match on Wednesday after Sussex spinner Mushtaq trapped Read lbw fifth ball for a duck.
After being given out, Read briefly returned to the pavillion before coming out to confront Mushtaq on the third-man boundary.
An angry exchange ensued in which Read, who had been irritated by Mushtaq's appeals on earlier deliveries, used the word "cheat," according to astonished spectators at the normally sleepy ground in Hove.
The penalty points remain on Reads record for a period of two years. The accumulation of nine or more penalty points in any two-year period triggers an automatic suspension.
Read subsequently apologised for his outburst and Mushtaq was philosophical about the incident.
"These sort of things can happen," he said. "People get angry when they are disappointed and I have every sympathy for Chris, who is a fine cricketer. We've shaken hands and as far as I'm concerned that is the end of it."
The incident has also been referred to the ECB Discipline Committee who will consider further action against Read, who is regarded as the best gloves man in English cricket but has been unable to hold on to a Test spot because of his indifferent batting.