A Central Reserve Police Force official said two members of the force were killed during an encounter that has lasted more than 48 hours.
An Indian government minister says New Delhi will not share proof that a large number of militants were killed in a compound inside Pakistan late last month, after Islamabad raised doubts that any insurgents were harmed in the air strike.
Tensions between the two nuclear armed-neighbors escalated following a suicide bombing in Indian-administered Kashmir in mid-February that left more than 40 Indian troops dead.
No country has offered to mediate to resolve the crisis between the India and Pakistan, and India will not accept any offer of mediation, a top Indian diplomat has said.
Director-General Inter-Services Public Relations (ISPR) Major General Asif Ghafoor said in a press conference that the armed forces had responsibly retaliated to Indian incursion by strucking a target few miles from an Indian military's administrative unit to ensure there were no human life or collateral damage."We made a decision to not hit a military target or endanger human life".
The US embassy in Islamabad said on Sunday it was looking into reports that Pakistan used F-16 jets to shoot down the Indian pilot, a potential violation of Washington's military sale agreements that limit how Pakistan can use the planes.
Pakistan's foreign minister Shah Mehmood Qureshi boycotted the meeting in protest over the invitation to his Indian counterpart.
But in a sign that tensions between the nuclear-armed rivals could soon ease, a Pakistani Cabinet minister said a key train service between Pakistan and neighboring India would resume on Monday.
Wreckage of downed Pak F-16 seen in PoK
An Indian military statement said that "out of anger and frustration", Pakistan "initiated unprovoked ceasefire violation". On Wednesday, Pakistan claimed it shot down two Indian fighter jets over Pakistani air space and arrested a pilot .
Indian foreign minister Sushma Swaraj addressed the Organization of Islamic Cooperation (OIC) session in Abu Dhabi on Friday and censured countries harboring terrorists on their soil, without naming Pakistan.
Al Jazeera's Rahman said the India-Pakistan standoff is likely to be a major issue in the Indian general election, due in April and May. India long has accused Pakistan of cultivating such militant groups to attack it. Pakistan has said it was not involved in that attack and was ready to help New Delhi in the investigation. Islamabad denies any of its aircraft were shot down. India's military said that Pakistan was firing mortar shells across the LoC.
A Pakistani government official says Indian troops with heavy weapons have "indiscriminately targeted border villagers" along the two countries' Line of Control in the Himalayan region of Kashmir, killing a boy and wounding three others.
The telephone talks came after Pakistan handed over a captured Indian air force pilot to Indian officials at a border crossing on Friday. A Pakistani military statement said two civilians were killed and two others wounded in the fresh fighting.
Pakistan said the Indian bombs hit a largely empty hillside without hurting anyone.
"These battles are fought on our bodies, in our homes and fields, and we still don't have anything in our hands".
India accuses Pakistan of arming and training the rebels and sending them into Indian-controlled Kashmir to launch attacks against government targets.
Mughal reported from Muzafarabad, Pakistan.