Two Indian soldiers have been killed in fighting with Pakistani soldiers and suspected militants along the volatile frontier in Indian-controlled Kashmir, officials said.
An army officer said militants ambushed an Indian army patrol overnight, killing one, while Pakistani soldiers provided covering fire near the Machil sector along the Line of Control dividing the disputed region between India and Pakistan.
Militants crossed over from Pakistani-controlled Kashmir while taking advantage of rugged terrain and thick foliage, the officer said.
He said Indian soldiers retaliated and killed an insurgent in what he described as "face-to-face combat".
The officer said the militants "mutilated" the body of the Indian soldier before fleeing to the Pakistani side.
There was no independent confirmation of the incident.
In a strongly worded statement, the Indian army called the soldier's mutilation a "despicable act".
"This barbarism is a true reflection which pervades official and non-official organisations across the border," the statement said.
"This act will invite an appropriate response."
Shortly afterwards, cross-border clashes erupted at several posts in the Machil sector, killing another Indian soldier.
In Pakistan, the military said that India on Saturday again resorted to unprovoked firing along the Line of Control and that the soldiers from the two countries were still exchanging fire. It did not say Pakistan suffered any casualties.
Indian and Pakistani troops have frequently exchanged cross-border fire in recent weeks, causing casualties on both sides. Both have blamed each other for initiating it.
While the Line of Control is guarded by the Indian and Pakistani armies and divides the two parts of Kashmir, each country also has a separate paramilitary border force guarding the lower-altitude frontier separating Indian-controlled Kashmir and the Pakistani province of Punjab.
Troops from the two countries have regularly traded fire since last month, when India said it carried out "surgical strikes" against militants in the Pakistan-controlled part of Kashmir.
Pakistan dismissed the claim and called on India to produce evidence to back it up.
On Thursday, each nation expelled a diplomat amid the escalating tensions.
Two of the three wars between India and Pakistan since 1947 have been fought over their competing claims to Kashmir. Each has administered part of Kashmir since 1947.
India accuses Pakistan of training and arming anti-Indian militants and helping them infiltrate into the Indian side.
Pakistan denies this, saying it only offers moral and diplomatic support to the militants and to Kashmiris who oppose Indian rule.