The Indian troops crossed the Line of Control the Bagh area of Pakistan and attacked a security checkpoint, Dawn News reported.
Two Pakistani soldiers were injured in the attack, one of whom later died during treatment. A Pakistani civilian was also killed during the attack and two others were injured.
Pakistani forces returned fire, resulting in the Indian forces pulling back.
Pakistani military officials said the Indian troops "physically raided" an army outpost, Voice of America reported. Indian military official said that contention was "baseless" and their troops only shot back after coming under fire from the Pakistan side of the border, the U.S. network said.
The two countries have fought three wars and there have been several violations since a cease-fire in the Kashmir region was reached in 2003. Pakistani Information Minister Qamar Zaman Kaira told VOA, however, relations between the two nuclear powers have improved.
"Yes, we had a very difficult time with India," he said. "Our forces were determined and they were cautious of the Indian threat. That threat is not over. Of course still it is there. But now the internal [terrorism] threat has taken over. It is a greater threat, of course, now. Pakistan is the biggest victim of this terrorism or extremism."