Waheed Khan, a local official, said an artillery shell hit the bus in the Neelum Valley on Wednesday, killing nine people.
Police official Waseem Khan said another two died when a mortar shell hit their house in the Nakyal sector of the Pakistani-held part of Kashmir.
An Indian Army spokesperson, Col Nitin Joshi, said India was responding to Pakistan’s violation of a cease-fire.
Pakistan opened fire at several Indian posts in Jammu and Kashmir early on Wednesday, a day after its troops killed three Indian soldiers, mutilating one of the bodies, in Macchil sector.
Sources said the Indian Army hit back, firing mortar shells at Pakistani posts from Poonch, Rajouri, Kel and Macchil sectors in another round of heavy exchange of fire between the two sides.
The firing began around 9am when Pakistan targeted Indian posts in Balakot, Bhimber Gali, Krishna Ghati and Naushera sectors along the line of control (LoC). The firing was on when the reports last came in.
The bodies of the three soldiers who were killed in Macchil along LoC, the de facto border, had been brought to Srinagar, television channels reported on Wednesday morning.
The army had reacted angrily to the killings. “Body of one soldier mutilated, retribution will be heavy for this cowardly act,” it tweeted on Tuesday.
India also lodged a protest with Pakistan when the foreign office in Islamabad summoned deputy high commissioner JP Singh on Tuesday to condemn “unprovoked ceasefire violations”.
Singh told director general (South Asia and Saarc) Mohammad Faisal that Pakistani troops were deliberately targeting civilian areas, resulting in heavy casualties.
The soldier whose body was mutilated has been identified as 25-year-old Prabhu Singh of Rajasthan. The other two were natives of Uttar Pradesh — 31-year-old K Kushwah and Shashank K Singh, 25.
Sources said Pakistani soldiers of the border action team (BAT) who attacked several Indian posts beheaded the slain soldier before sneaking back into Pakistan-occupied Kashmir (PoK). BAT draws men from terror outfits such as the Lashkar-e-Taiba and Jaish-e-Mohammad.
This is the second mutilation in cross-border skirmishes after Pakistan-based militants ambushed an army base in Kashmir’s Uri and killed 19 soldiers in September.
Militants crossed the LoC and mutilated the body of 30-year-old sepoy Mandeep Singh after killing him in the Macchil sector on October 28, triggering outrage across the nation.
There was no immediate comment from Pakistan, which last week accused India of killing seven of its soldiers in cross-border fire in Kashmir.
Around 17 Indian soldiers have been killed in cross-border firing since India hit militant launch pads in Pakistan-occupied Kashmir after the Uri attack.
Pakistani troops have pounded frontier villages and military outposts across the border with machine guns and mortar shells.
Experts say such savage acts of disfiguring a slain soldier’s corpse is not rare along the LoC, where Indian soldiers have been fighting Pakistan-backed militants since the outbreak of militancy in Kashmir in the 1990s.