Zabihullah Amani, a spokesman for the provincial governor, said the fighters, who included foreign militants, attacked a security outpost in the Mirza Olang area of Sayaad district overnight, torching 30 houses.
He said fighting was still going on but as many as 50 people, including children, women and elderly men, most of them members of the largely Shia Hazara community, may have been killed, according to local village elders.
"They were killed in a brutal, inhumane way," he said.
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Seven members of the Afghan security forces were also killed as well as a number of insurgents.
Many details of the attack, including the identity of the insurgents, were not immediately clear.
Amani said they were a mixed group of Taliban and Islamic State fighters but the Taliban itself denied any involvement, dismissing the claim as propaganda.
A senior government official in Kabul said that security forces, including Afghan Air Force attack aircraft, were being sent to the scene.
Meanwhile, Afghan President Ashraf Ghani condemned the reported massacre of dozens of civilians in a remote area of the war-torn country where the Taliban claimed a victory against military forces.
"Criminal terrorists have once again killed civilians, women and children in Sayad district of Sar-e Pul province, adding to their crimes.
"This barbaric act of them is deemed a direct violation of human rights and a war crime," Ghani said in a statement.
Mohammad Zaher Wahdat, the provincial governor, added that several mosques were set ablaze while an unknown number of villagers had also been taken hostage following a 48-hour battle between insurgents and Afghan security forces.
The village is situated in an extremely remote part of the country, where both the Taliban and Islamic State group fighters have a presence, and AFP was unable to confirm the reports with independent sources.
The Taliban said in a statement that it had captured Mirza Olang village but rejected reports of civilian casualties, calling it ‘hollow propaganda by the enemy’.
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The incident comes after the Afghan government claimed last month that Taliban fighters had killed 35 people in an attack on a hospital in central Ghor province.
Officials later backtracked though, underscoring the difficulty of verifying information from poor, mountainous areas of Afghanistan made inaccessible by fighting and with patchy communications.
The Taliban is at the peak of its summer fighting season and has carried out a number of deadly attacks in recent days, including the killing of two US soldiers in a suicide bomb attack in Kandahar on Wednesday. Agencies
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