An Indian army spokesman in a statement said that four soldiers and a gunman were killed in a gunbattle in Kapwara district of the Indian occupied Kashmir.
Army spokesman said that the soldiers found their colleagues’ bodies on Monday morning during a search for militants in Hafruda forest, 140 kilometres (86 miles) northwest of Srinagar.
Indian forces have cordoned off the area and launched a search operation against the militants.
Scenic Himalayan region Kashmir has been divided between Pakistan and India and both countries claim the territory in its entirety.
Several rebel groups have for decades been fighting hundreds of thousands of Indian forces deployed in the region, seeking independence for the territory or its merger with Pakistan.
India often accuses Pakistan of training and arming insurgents, while Islamabad says it only provides diplomatic and moral support for the Kashmiri people’s struggle for self-determination.
Tens of thousands have died in the conflict, mostly civilians.
Prime Minister Nawaz Sharif last week in an address in United Nations General Assembly had proposed a new peace initiative with India over Kashmir, suggesting demilitarisation of the disputed territory.