Four militants sprayed bullets on the convoy carrying members of India's Central Reserve Police Force (CRPF) near Pampore town, killing five soldiers instantly and wounding 20, inspector general of police for the region, Javaid Gillani, told AFP.
A top regional police official said three others succumbed to their injuries later.
"The toll of CRPF personnel killed in the attack is now eight, after three more died of their injuries," Rajendra Kumar, director general of police in the region said.
Six troopers dead in rebel attack in northeast India
Another officer said that the injured soldiers were taken to a nearby military hospital.
"We have killed two militants, that is what we are happy about at this time. Two others escaped the spot," said Nalin Prabhat, the inspector general for CRPF in the region.
Kashmir has been divided between rivals India and Pakistan since Partition in 1947. Both claim the Muslim-majority region in its entirety.
Overall violence in Indian-held Kashmir has sharply declined during the last decade, but in recent months the region has witnessed a spurt in armed encounters between government forces and rebels who have been fighting for decades for independence or a merger of the disputed territory with Pakistan.
The fighting has left tens of thousands, mostly civilians, dead over the past three decades.
Gunmen attack convoy in Indian-held Kashmir, two army personnel dead
Saturday's attack came after seven suspected rebels were killed in three separate gunbattles with government forces earlier this week in the north of the territory, according to the Indian army.
Hours before the violence, Jammu and Kashmir Chief Minister Mehbooba Mufti was elected Saturday to the state parliament. She was appointed as chief minister earlier this year after her father died in office but was required to win a local poll within six months to continue in the role.
India regularly blames Pakistan for sending armed militants to launch attacks in the territory. Islamabad denies the allegation, saying it only provides diplomatic support to the Kashmiri struggle for right of self-determination.
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