India's military has accused the Pakistani army of shooting dead an officer in "unprovoked firing" in the disputed territory of Kashmir.
It says Indian troops retaliated and that shots were exchanged for 40 minutes across the ceasefire line in the Jammu region.
However a Pakistani military spokesman denied this, saying there had been no firing on Indian positions.
Claimed by both countries, Kashmir has been a flashpoint for over 60 years.
In January, several deadly cross-border attacks plunged the neighbours into the worst crisis in relations in years.
Friday's firing is the first ceasefire violation since the new Pakistan PM Nawaz Sharif took over on Wednesday. Mr Sharif has said better relations with India are a priority for his government.
"Junior Commanding Officer Bachan Singh was killed when Pakistani snipers fired at an Indian post near Mandi in the Poonch sector," an Indian army official told the BBC.
After the January incidents, relations between the sides deteriorated so sharply that there were fears that a fledgling peace process under way since February last year could unravel.
Although both sides denied provoking the clashes along the border, eventually both India and Pakistan agreed to de-escalate tensions.
Cross-border trade and transport links, which had been suspended for a few weeks in the wake of the tensions, also later resumed.
India and Pakistan agreed a ceasefire along the line of control, which divides the disputed region, in November 2003.
But both sides have blamed each other for occasional cross border fire as a result of which several soldiers and civilians have been killed or wounded on both sides.
Thousands of people have been killed in Indian-administered Kashmir since an armed revolt against Indian rule erupted in 1989.