Army set up a vehicle check post at Chattergam chowk, 20 kms from here, in Chadoora area of Budgam following information about movement of militants through the area, the sources said.
An army team travelling in a civillian vehicle did not stop at the check point, giving rise to suspicion among the troops at the check post, who opened fire.
Two jawans and the civilian driver of the vehicle were injured in the incident, the sources added.
Sepoy Ghulam Rasool Sheikh succumbed to injuries while Naik Setien Tao and driver Abdul Rauf were wounded and admitted to the 92 Base Hospital at Badamibagh Army headquarters, the sources said.
A senior police official said a team has been sent to the spot to investigate into the incident.