"The explosion took place at 9.45 p.m. on Monday night in the Green Village complex in Qabilbay locality, Police District 9. A fuel pump station at the site also exploded and caught fire following the explosion," the city police said in a statement.
The number of casualties was likely to rise, the statement added.
Taliban militants have claimed responsibility of the attack, Xinhua news agency reported.
Zabiullah Mujahid, a Taliban spokesman, said that the outfit's fighters launched a suicide car bombing and gun attack against Green Village, a well-protected complex where a number of foreign entities and offices are located and frequented by foreigners living or working in Kabul.
Afghan Interior Ministry spokesman Nasrat Rahimi rejected the Taliban's claim and wrote on social media that "the enemies' claim that gunmen entered the Green Village complex is untrue".
"Unfortunately, the blast damaged residential houses in 1 km radius," he said.
The Green Village complex had been targeted by Taliban insurgents at least three times in the past.
Monday's explosion came hours after Afghan President Mohammad Ashraf Ghani met visiting US Special Representative for Afghan Reconciliation Zalmay Khalilzad, where the two discussed the latest round of negotiations between Taliban representatives and an American delegation in Qatar.
( With inputs from IANS )