The nations had been working to de-escalate tensions since a major clash killed at least 24 troops in 2020.
But on Monday, the Indian army said there had been a clash in the Tawang sector of Arunachal Pradesh state last Friday, the eastern tip of India.
Both sides were involved with a few soldiers suffering minor injuries.
Reuters reported an Indian army source saying at least six Indian troops were injured.
“Both sides immediately disengaged from the area,” the Indian army said.
It added that commanders from both sides had held a meeting immediately after “to restore peace and tranquility”.
India’s Defence Minister Rajnath Singh, who addressed lawmakers in Parliament on Tuesday, said the encounter started when Chinese troops “encroached into Indian territory” and “unilaterally tried to change the status quo” along the disputed border near the Yangtse area.
He said the Indian solders responded with firmness and prevented the Chinese army from “transgressing into our territory”, and forced them to return to their posts.
Mr Singh said that some soldiers from both sides had been injured in the skirmish but no Indian soldiers had been “hurt or seriously injured” in the clash.
He said that local military commanders met on Sunday to discuss the dispute, adding that the incident has been taken up with the Chinese side “through diplomatic channels”.
China’s foreign ministry gave no details on the incident but said that according to their knowledge, the situation on the border with India was “generally stable”.