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In a "barbaric" incident, terrorists, aided by the cover fire by Pakistani Army, on Friday night crossed the Line of Control and killed an Indian soldier and mutilated his body in Macchil sector of Kupwara district of Kashmir.
One terrorist was killed in the incident which the Indian army said will be "responded to appropriately".
Television channel India Today reported that the terrorists beheaded the soldier, reportedly belonging to the 17 Sikh regiment, and carried his head back with them across the LoC.
"In an encounter close to the Line of Control this evening, one solider was martyred and one terrorist was killed. The terrorists mutilated the body of the jawan before fleeing back into Pakistan-occupied-Kashmir under the cover of firing by Pakistan Army," an army spokesman said.
He said the incident reflected the barbarism pervading in official and unofficial organisations in Pakistan.
"The incident will be responded to appropriately," he added.