The funeral pyre was lit by Major Pandey's younger brother.
Chants of 'Vande Mataram' and 'Hindustan Zindabad' rend the air as a large number of people watched his mortal remains being consigned to flames at Chitrashila Ghat, Ranibag near Haldwani.
Uttarakhand minister Yashpal Arya, District Magistrate Dipendra Chowdhary and Senior Superintendent of Police Janmenjay Khanduri were among those who attended the last rites.
Major Pandey, Sepoys Tanzin Chhultim and Kirpal Singh were injured in the firing by terrorists at Zainapora in Shopian district during a cordon and search operation launched by security forces yesterday.
The injured soldiers were evacuated to the Army's 92 Base Hospital in Nainital for treatment but Major Pandey and Sepoy Chhultim died of injuries.