The incident comes hours after India blamed Pakistani troops for killing three of its soldiers in the disputed Kashmir region.
Indian shelling across the frontier into Pakistani-controlled Kashmir hit a bus, killing at least nine people and wounding 11, Pakistani officials said, as tensions between the nuclear-armed neighbours simmers.
Indian troops attacked the bus "with small and big arms" in the town of Lawat, senior police official Jamil Mir said.
Pakistan's military media wing, ISPR, said in a statement that seven people were killed and seven wounded.
Lawat is 100 km northeast of Muzaffarabad, the capital of Pakistani-held Kashmir, in the upper belt of Neelum Valley that straddles the de facto border splitting Kashmir between India and Pakistan.
Indian officials did not comment on the deaths but a military spokesman said the Pakistani Army initiated "indiscriminate" firing on Wednesday morning on Indian Army posts in Bhimber Gali, Krishna Ghati and Nawshera sectors.
Relations between Pakistan and India have been strained for several months, while cross-frontier shelling has intensified leading to deaths of civilians and soldiers stationed along the disputed frontier.
Kashmir lies at the heart of the tension. The countries have fought two of their three wars over the region since partition and independence from Britain in 1947.