Officials in Pakistan say at least nine people were killed when cross-border shelling from India hit a passenger bus in the disputed Kashmir region.
Eleven others were reportedly wounded. Officials say two people also died in Indian shelling elsewhere in Pakistan-administered Kashmir.
India had earlier vowed to avenge the killing of three soldiers, one of whose bodies it said had been mutilated.
Tensions have risen since militants killed 19 Indian troops in September.
Both countries accuse each other of violating a 2003 truce accord.
Both countries claim the whole territory but control only parts of it
Since 1989 there has been an armed revolt in the Muslim-majority region against rule by India, which is mostly Hindu
Two out of three wars fought between India and Pakistan centred on Kashmir
A new war could be even more disastrous as both states now have nuclear arsenals
The passenger bus reportedly came under fire from India's side of the de facto border as it was travelling from Kel to Muzaffarabad in the Neelum valley region.
Pakistani officials accused India of deliberately targeting civilians. There was no immediate response from India.
On Tuesday the Indian army promised "heavy" retribution" after one of its patrols was ambushed in the Kupwara sector.
Pakistan says more than 30 civilians and 11 soldiers have been killed on its side in fighting since August. India says 12 civilians and 11 of its soldiers have died over a similar period.
Dozens more have been injured and thousands of people have left the area or are trapped in their homes.
Firing from both sides has increased since the deadly militant attack on an Indian army base on 18 September. India hit back on 30 September with cross-border "surgical strikes" targeting militant groups blamed for killing the soldiers.
A BBC investigation found that Indian troops had crossed the de facto border (the "Line of Control") to hit border posts but then pulled back without going deep into Pakistani-administered territory.
Why did India go in so hard?
Narendra Modi's BJP government swept to power in 2014 promising a tough line on Pakistan and was under tremendous pressure to hit back after its soldiers were killed in September.
Many observers say Mr Modi feels he has to placate an angry domestic constituency and send out a message that he is a strong leader.
Pakistan accuses India of taking military action to deflect attention from human rights abuses in the region.
At least 85 people, nearly all protesters, have died in months of violent unrest against Indian rule since a popular militant leader was killed in the summer.
Eleven others were reportedly wounded. Officials say two people also died in Indian shelling elsewhere in Pakistan-administered Kashmir.
India had earlier vowed to avenge the killing of three soldiers, one of whose bodies it said had been mutilated.
Tensions have risen since militants killed 19 Indian troops in September.
Both countries accuse each other of violating a 2003 truce accord.
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| Relations between India and Pakistan have deteriorated in recent months |
Five things to know about Kashmir
India and Pakistan have disputed the territory for nearly 70 years - since independence from BritainBoth countries claim the whole territory but control only parts of it
Since 1989 there has been an armed revolt in the Muslim-majority region against rule by India, which is mostly Hindu
Two out of three wars fought between India and Pakistan centred on Kashmir
A new war could be even more disastrous as both states now have nuclear arsenals
The passenger bus reportedly came under fire from India's side of the de facto border as it was travelling from Kel to Muzaffarabad in the Neelum valley region.
Pakistani officials accused India of deliberately targeting civilians. There was no immediate response from India.
On Tuesday the Indian army promised "heavy" retribution" after one of its patrols was ambushed in the Kupwara sector.
Pakistan says more than 30 civilians and 11 soldiers have been killed on its side in fighting since August. India says 12 civilians and 11 of its soldiers have died over a similar period.
Dozens more have been injured and thousands of people have left the area or are trapped in their homes.
How bad is the situation?
Before the new deaths this week, the Pakistani military apparently suffered its biggest single loss of life in Kashmir since the 2003 truce, when seven soldiers were killed in shelling in a single day.Firing from both sides has increased since the deadly militant attack on an Indian army base on 18 September. India hit back on 30 September with cross-border "surgical strikes" targeting militant groups blamed for killing the soldiers.
A BBC investigation found that Indian troops had crossed the de facto border (the "Line of Control") to hit border posts but then pulled back without going deep into Pakistani-administered territory.
Why did India go in so hard?
Narendra Modi's BJP government swept to power in 2014 promising a tough line on Pakistan and was under tremendous pressure to hit back after its soldiers were killed in September.
Many observers say Mr Modi feels he has to placate an angry domestic constituency and send out a message that he is a strong leader.
Pakistan accuses India of taking military action to deflect attention from human rights abuses in the region.
At least 85 people, nearly all protesters, have died in months of violent unrest against Indian rule since a popular militant leader was killed in the summer.
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