The mishap occurred yesterday when the family hailing from Gujarat, was enjoying rafting in Lidder stream near power house Nunwan, a police spokesman said.
Rescue teams immediately swung into action after the rafting boat carrying the family capsized and rescued all the five members of the family, he said.
However, one of them identified as Arsha Shah died while being shifted to a hospital, the spokesman said.
Bilkeesa Bano (7) and Gulshana (7) were crossing the stream near their Affan village last evening when they slipped and were swept away by the strong current, he said, adding that their bodies were fished out later and handed over to their relatives.