A defence spokesman said retaliatory action by the army is underway.
"In a cowardly and provocative act of terror, terrorists carried out a stand-off attack on Kakapora Army Camp. One soldier martyred. Retaliatory actions ongoing" said the defense spokesman.
Earlier, state police and Home ministry officials had said that ceasefire is having a positive impact in Kashmir and both terrorist activities and stone throwing incidents have drastically come down.
Officials even hint at extending ceasefire beyond the month of Ramzan if the situation shows signs of improvement.
"Pakistan has been completely exposed, busy killing people even during Ramzan," Jitendra Singh, Minister of State in the Prime Minister's Office told NDTV.
Incidents of stone throwing in Kashmir have reportedly dipped-- from 44 a week before Ramzan to 16 following the 'ceasefire' call. But there's little change in terms of civilian injuries caused by stone-throwing mobs. If 17 people were injured a week before the centre extended the olive branch, 15 civilians suffered injuries the week after.