A group of militants with rocket launchers and grenades launched the attack early on Wednesday, Oct 28 morning. The gunbattle between the security forces and the militants is still on.
Security forces believe that there are five to six terrorists inside the international guesthouse.
Area surrounding the building has been cordoned off and the markets shut.
While ten UN staff are believed to be trapped inside, UN has reportedly confirmed that out of the seven fatalities three were that of its staff members.
Meanwhile, Afghanistan Taliban has claimed responsibility for the attack which comes ahead of the presidential election.