The attack took place at 5.30 AM this morning at Nagrota which is around 20 kilometres away from Jammu.
A gun battle is on between the terrorists and the security personnel.
The army has cordoned off the entire area.
School have been ordered to remain shut as a precautionary measure.
According to sources, three terrorists carried out the attack.
The terrorists were seen close to the ammunition depot of the White Knight Corps Army Unit Nagrota.
Additional forces have been rushed to the spot and counter terror operations are underway.
Initial assessment conducted by the Intelligence Bureau suggests that these terrorists are part of a fidayeen squad.
While the suspicion is on the Lashkar-e-Tayiba, IB officials say that they are looking for more information.