While the Kashmir Police's Twitter handle said five labourers were killed, police sources said that the toll was six.
Police sources said that the militants came to Katrasoo village of Kulgam, took out the masons and carpenters from outside the state working there and opened fire at them, killing five of them on the spot. The sixth succumbed to his injuries while being taken to a hospital.
Five of those killed were identified as Sheikh Kamrudin, Sheikh M. Rafiq, Sheikh Murnsulin, Sheikh Nizam ud Din and Mohd Rafiq Sheikh. The injured labourer was Zahoor ud Din.
Sources said that some more labourers could be missing.
Security forces have rushed to the spot and thrown a cordon around the area, while a high alert has been sounded.
The attack came as a delegation of Members of European Parliament arrived in Srinagar to see the ground situation, amid sporadic incidents of violence and a shutdown.
Their visit triggered violence with incidents of stone pelting and clashes were reported from several areas in Srinagar including Chanpora, Rambagh, and Maisuma among others, leaving six people reportedly injured.
Shops and businesses remained closed and even private transport was playing less than routine in view of heightened tension.
In some areas, youths had blocked the road to prevent the movement of traffic.
There were also reports of firing on a security patrol in Drubgaon in Pulwama in south Kashmir, but no injuries were reported.
However, on Monday night, a truck driver was shot dead by terrorists in Anantnag.
It was the fourth attack in a week in the Kashmir Valley.
Earlier, two truck drivers, both from outside the Kashmir Valley, were killed by terrorists in Shopian.
Before that, two terrorists, including a suspected Pakistani national, shot dead a truck driver from Rajasthan, and assaulted an orchard owner, also in Shopian.
( With inputs from IANS )