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Police say the militants shot dead two civilians in Samba district, south of Jammu, and were then confronted by security forces.
A soldier was killed in the subsequent clashes and one report quotes the army as saying two gunmen also died.
There has been a big fall in fighting in recent years, after the start of an India-Pakistan peace process.
Indian officials, however, say Islamist militants are still trying to cross into the area to sustain the insurgency that has gone on for nearly 20 years.
Militant groups have been fighting against Indian rule in Kashmir since 1989 and the conflict has cost more than 60,000 lives.
(BBC)
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