The five were killed after a shell fired by Pakistani soldiers hit their home in the Poonch region of India-controlled Kashmir along the militarized Line of Control that divides the Himalayan territory between the two nuclear-armed neighbors, said S.P. Vaid, the region's police chief.
A police statement said the dead included a 35-year-old man and his 32-year-old wife, and three of their children - two young boys and a teenage boy. Two of the couple's daughters, one 7 and the other 12, were among the injured.
Local residents said the family had gathered in their kitchen for breakfast when a shell hit their home.
Vaid said authorities were evacuating civilians from the area amid shelling and firing.
India's army said its soldiers were responding to what it called an unprovoked violation of the 2003 cease-fire agreement between the two countries.
Authorities in Pakistan-controlled Kashmir said at least six civilians, including five women, were wounded in the Indian firing and shelling along the frontier.
Farooq Hadier Khan, prime minister of the Pakistani-controlled part of Kashmir, condemned Indian shelling of border villages and visited a hospital to meet injured residents, an official statement said.
Like in the past, both countries blamed the other for starting the firing, insisting they were only retaliating.
The violence comes amid heightened diplomatic tensions between New Delhi and Islamabad, who have accused each other of harassing their diplomatic staff in the two capitals.
This year, soldiers from the two nations have also been engaged in fierce border skirmishes along the rugged and mountainous Line of Control, as well as a lower-altitude 200-kilometer (125-mile) boundary separating India-controlled Kashmir and the Pakistani province of Punjab.
India and Pakistan have fought two of their three wars since 1947 over their competing claims to the region.
Many see the fighting as part of what's become a predictable cycle of violence, as the region convulses with decades-old animosities between India and Pakistan over Kashmir, where rebel groups demand that the territory be united either under Pakistani rule or as an independent country.
A flare-up early this year similarly sent thousands to temporary shelters for days.
India accuses Pakistan of arming and training anti-India rebels and also helping them by providing gunfire as cover for incursions into the Indian side. Pakistan denies this, saying it offers only moral and diplomatic support to the militants and to Kashmiris who oppose Indian rule. Nearly 70,000 people have been killed in the uprising and the ensuing Indian military crackdown since 1989.
Associated Press writer Roshan Mughal in Muzaffarabad, Pakistan, contributed to this report.
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