The skirmish in the Akhnoor sector of the International Boundary that caused no casualties came days after India claimed to have conduced deadly surgical strikes at terror launch pads in Pakistan-administered Kashmir.
Defence sources in Jammu said Pakistan Rangers targeted Indian posts and civilian areas with mortar bombs and heavy machine guns. Indian border forces retaliated but no damage was reported on the either side, they said.
Both sides accused the other of resorting to unprovoked fire in the latest violation of the 2003 ceasefire agreement.
It was the fifth breach of the truce in the past four days when military tension rose following the Indian covert anti-terror operation across the Line of Control (LoC) - the 740 km de facto border that divides Jammu and Kashmir between India and Pakistan.
Indian Army Chief Gen. Dalbir Singh visited Jammu and some border posts and complimented soldiers who carried out the September 28 surgical strike that was said to have annihilated seven terror launch pads located in Tatta Pani, Leepa Valley, Bhimber and Kael in Pakistani-administered Kashmir.
The army chief reviewed the operational preparedness of the army along the borders in the wake of heightened tension.
Pakistan has denied the Indian claim of the surgical strike, terming it as a "hyped routine border clash".
On Saturday, Defence Minister Manohar Parrikar said the Pakistani denial is because it is "in a state of coma just like anyone is after a surgery".
"We do not want to capture any nation. Lord Rama won Lanka and gave it to Vibhishana. We did the same in Bangladesh. We do not want to harm anyone, but if someone harms us a befitting reply will be given."
The rising rift has led to thousands of residents being relocated from around border villages in India amid fears of further military clashes between the two nuclear-powered nations.
This has also caused global worries with the US in a direct message to Pakistan urging it to exercise restraint when it comes to using atomic weapons.
"I would just say nuclear-capable states have a very clear responsibility to exercise restraint regarding nuclear weapons and missile capabilities," US State Department deputy spokesperson Mark Toner said in a daily press briefing in response to a question.
"And that's my message publicly and that's certainly our message directly to the Pakistani authorities."
UN Secretary-General Ban Ki-moon has expressed deep concern over the "significant increase in tensions" and offered to mediate.
"The Secretary General is deeply concerned...in the wake of the recent developments, in particular the reported cease-fire violations along the Line of Control (LoC) following an attack on an Indian army base in Uri on 18 September," his spokesperson said in a statement.
Ban urged both sides to exercise "maximum restraint" and take immediate steps to de-escalate the situation.
He called on both the governments to "address their outstanding issues, including regarding Kashmir, peacefully through diplomacy and dialogue.
"His good offices are available, if accepted by both sides," said the statement.
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