All movement including travelling and trade along the Line of Control (LoC), which divides the disputed Himalayan region between Pakistan and India, had been suspended after Indian authorities detained a Pakistani truck driver for allegedly carrying 114 kilograms (250 pounds) of heroin.
"Senior officials from the two sides met recently and decided to resume the bus service in the first phase from January 3," Mohammad Ismail, chief of the Trade and Travel Authority (TTA) in Pakistan-occupied-Kashmir (PoK), told AFP.
However, he said there has been an impasse over resumption of trade.
At least 49 Pakistani trucks and their drivers were being held on India's side of the border following the incident, while Pakistan had retaliated by holding 27 trucks.
Meanwhile, traders and relatives of the detained truck drivers rallied in Muzaffarabad, the capital of PoK, on Saturday and said they would not allow resumption of the bus service until all the drivers return to their homes in safety.
"The government should not resume the bus service until India returns our drivers and their trucks. All the local traders and their families will stop this bus from leaving Muzaffarabad on Monday," secretary general of Intra-Kashmir Trade Hamid Kashmiri told AFP.
Barter trade across the de facto border began in 2008 as part of peace efforts between the nuclear-armed neighbours, but it is frequently disrupted by disputes.
It was last suspended in September 2013 for a period of almost six weeks over a disagreement on the origin of goods being traded.
Kashmir, divided between India and Pakistan at their independence from Britain in 1947, has been a continual thorn in relations and the countries have fought two wars over the territory.
More than a dozen armed rebel groups have been fighting Indian forces since 1989 for the region's independence or its merger with Pakistan.
Tens of thousands of people have died in the fighting, according to an official count, while local rights groups estimate up to 70,000 have lost their lives.