Indian troops raided a Pakistani military post on Sunday, killing one soldier and injuring another, the Pakistani military said, an incident that could heighten tensions between the neighbouring nuclear powers after a period of rapprochement.
The Pakistani army repulsed the attack on the Sawan Patra checkpost in Kashmir, an army spokesman said in a statement.
The two sides then exchanged fire across the Line of Control, an internationally recognised line in the disputed Kashmir region patrolled by troops from both countries.
The Indian defence ministry was not immediately available for comment.
Attacks across the Line of Control are not uncommon. The two sides sporadically exchange fire, though far less frequently than they used to.
India and Pakistan have fought three wars since 1947, when they became independent from Britain.
The two countries fought their most recent war in 1999, when Pakistani troops crossed the Line of Control and occupied Indian territory in Kargil, but were forced to withdraw.
After a period of quiet, relations between the two countries nosedived again in 2008, when a militant squad rampaged through the Indian city of Mumbai, killing 166 people. India accused Pakistan of sheltering the masterminds behind the attack, charges that Pakistan denies.
The two countries have been slowly repairing relations in recent months. In November, India executed a Pakistani man who was the last surviving perpetrator of the Mumbai attack.
Last month the two countries signed a deal designed to ease visa restrictions for some citizens to travel between the two countries.
Tension between the two countries has also spilled over into nearby Afghanistan, which borders Pakistan. India offers military and economic aid there, but many Pakistanis fear this is an attempt to lessen Pakistan's influence.
The United States has repeatedly urged Pakistan to move against al-Qaeda and militant havens along its Afghan border.
Pakistan says it does not have enough troops because so many of them are patrolling the border with India.
Some US officials also believe Pakistan is unwilling to move against the militants because some elements in Pakistan's security forces would prefer to be able to use the militants to counter Indian influence in Afghanistan after most foreign combat troops have pulled out by the end of 2014.