Condemning the attack, which it called provocative, Government said it will take up the incident with Pakistan. "We expect Islamabad to honour the ceasefire agreement strictly," Defence Ministry said in a late night statement.
Army's Additional Director General (Public Information) Major General S L Narasimhan said Northern Army Commander Lt Gen K T Parnaik visited the scene of action and confirmed that one of the two bodies was mutilated.
Other sources said the heads of both the Indian soldiers -- Lance Naiks, Hemraj and Sudhakar Singh -- have been chopped off and one was taken away by Pakistani intruders.
This was a chilling reminder of the brutal attack on Capt Saurabh Kalia and his team by Pakistani troops in Kaksar sector of Kargil during the 1999 conflict.
Today's attack took place along the Line of Control in Poonch district when Pakistanis came about 100 metres into Indian territory and assaulted the patrol party.
Besides killing two, they also injured two other soldiers and took away their weapons and other belongings.
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In Islamabad, Military spokesman denied India's allegation of provocative action in Poonch sector by Pakistani troops.
However, the sources said Pakistan Army's Border Action Team entered into Indian territory at Krishna Ghati area of Poonch district and carried out the strikes well past 11.30 AM and the attack lasted for more than an hour.
Army's Udhampur-based Northern Command came out with a statement terming the attack as a "significant escalation" to the continuing series of ceasefire violations and infiltration attempts supported by Pakistan Army.
"A group of their regular soldiers intruded across the Line of Control in the Mendhar Sector on January 8. Pakistan army troops, having taken advantage of thick fog and mist in the forested area, were moving towards our posts when an alert area domination patrol spotted and engaged the intruders," it said. (MORE)