A section of the Hoops' fanbase held the demonstration before and during the clash at Celtic Park in Europe's elite club competition, in which Brendan Rodgers' men won 5-2.
UEFA have condemned the flags as “illicit banners” and therefore the fine was imposed. It is the ninth time in recent years that Celtic have been punished by European football's governing body over supporter misconduct.
Over £172,000 has since been raised by Celtic supporters for Palestinian charities since the UEFA launched its disciplinary proceedings as part of a 'match the fine' campaign.
Celtic opened their Champions League group stage campaign with a 7-0 defeat against Barcelona, before drawing 3-3 with Manchester City on Wednesday.
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