Jammu and Kashmir Chief Minister Omar Abdullah on Thursday said that 12 people have been killed in the terror attack.
The CM said reports have been received that "12 people have been killed".
The brazen attack took place ahead of ahead of September 29 meeting between Indian Prime Minister Manmohan Singh and Pakistan Prime Minister Nawaz Sharif in New York on the sidelines of the UN general assembly meet.
Three militants reached the Hira Nagar police station in Kathua district in an autorickshaw, police sources told the news agency.
They then attacked the police station, which is barely seven km from the international border.
"Militants used grenades and automatic weapons to attack the Hira Nagar police station today (Thursday) morning...," said a source.
The terrorists lobbed grenades and fired automatic weapons, killing a shopkeeper.
Four policemen were also killed.
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Once the attack at the police station got over, the militants shot dead a truck driver and stole his truck that was parked at the police station complex and escaped.
They took to the Pathankot-Jammu highway and the gunmen opened fire in Samba town -- only to run into Indian troops. The highway has now been closed.
"We intercepted the truck which the militants were driving in Samba area," a military spokesperson told the news agency.
Army sources said the militants then entered an army unit of Samba brigade, about 35 km from Jammu, and opened fire. An army officer and two soldiers were killed while three soldiers were wounded.
"There has been an attack on a police station and an army camp...we are collecting information," Union Home Minister Sushilkumar Shinde told reporters in New Delhi.
Army sources say that they have taken the help of helicopters, which were used to bring army commandos to the site of the firing.
The Samba brigade belongs to the 9 Corps, which is headquartered in Himachal Pradesh. It falls under army's Western Command.