The officer said the protesters had tried to damage a railway track and hurled rocks at the troops guarding the track.
However, local residents said they were holding a peaceful protest march after offering Friday prayers when the soldiers opened fire.
Three of those wounded were in critical condition, the police officer said, adding that other clashes erupted in several nearby villages after the shooting.
Protests and clashes were also reported from several other towns in the region.
Earlier on Friday, violence erupted in Srinagar after two men were wounded when security forces opened fire on a group of protesters demonstrating against Indian rule.
The soldiers shot at rock-throwing demonstrators, wounding two young men - one critically - in the Chanapora neighbourhood, said another police officer on condition of anonymity.
The second officer said the protesters began marching on the main road in Chanapora on Friday morning after separatists called for a protest march to Srinagar's central Maisuma district.
Local residents, however, said the injured men were not part of the demonstration, and soldiers shot them near their homes.
Shouts for independence
As the news of the shooting spread, thousands of residents in the city took to the streets chanting, "Go, India! Go back" and "We want freedom!"
The majority-Muslim region has been under curfew for most of the last six weeks as street demonstrations and clashes against Indian rule have surged.
Friday's deaths bring the number killed in the recent protests to 19.
Earlier this week, local authorities asked two retired judges to investigate the deaths.
Separatists have told people to observe strikes to protest against Indian rule for five days this week, excluding Tuesday and Saturday to allow people to stock up on food and other essentials.
Separatist politicians and fighters reject Indian sovereignty over Kashmir and want to carve out a separate homeland or merge with predominantly-Muslim Pakistan.