Police said the Thursday night killings by three men were the latest in several grisly attacks in which civilians were killed with axes or had their throats slashed.
The killings occurred in the village of Dhoob, in a remote area about 190km northwest of Jammu, the winter capital of India's Jammu-Kashmir state, said Deputy Inspector General VK Singh on Friday.
Jammu-Kashmir is the only Muslim-majority state in Hindu-majority India.
The attackers walked into the village and lined up all the men, forcing the Muslims and Hindus to stand in separate lines, Singh said.
He said the killers were from one of about a dozen Pakistan-based groups that have been fighting Indian security forces in Kashmir since 1989 to create a separate state or merge the Himalayan region into Pakistan.
The police officer, however, gave no evidence to back up that claim. No group has claimed responsibility for the attack.
More than 66,000 people, mostly civilians, have been killed in the conflict since the insurgency began in 1989. Jammu-Kashmir is currently divided between India and Pakistan, and claimed in its entirety by both sides.
India accuses Pakistan of training and arming the rebels, but Islamabad denies the charge and says it only provides them with moral and diplomatic support.
The militants mainly target security forces with ambushes, grenade attacks and remote-controlled bombings. But they have been known to target civilians who are suspected of being informers for security forces.
Most of the victims of the conflict
have been civilians
India's heightened campaign and a fence built along the disputed frontier has brought down the number of attacks and decreased infiltration from the Pakistan-controlled portion of Kashmir.
"But killings such as these, by slitting throats, have increased for two reasons - they want to create terror and their supply lines of guns from across the border are coming under pressure from us," said Singh.