Terming the beheading as "unacceptable" and "unpardonable", he said India's military has been asked to respond aggressively and offensively.
Talking tough, he said the killing of two Indian soldiers on the LoC in Mendhar area of Jammu and Kashmir on January 6 was a pre-planned and pre-meditated action by Pakistani troops and India reserves the right to retaliate at
Addressing a press conference here on the eve of Army Day, Gen Singh said India's response to Pakistani firing at its posts in LoC in J and K is measured and perfect.
"Beheading (of Lance Naik Hemraj) is unacceptable and unpardonable," the Army Chief said about the incident in which Pakistan soldiers crossed into the Indian territory to attack Indian army patrol party.
"It (the attack) was stage-managed and pre-planned (by Pakistan). They (Pakistan) have planted lies to justify what they have done," he said.
He said the attack was carried out by Pakistan army personnel but did not rule out the possibility of Lashkar-e-Taiba terrorists being associated with it.
Gen Singh said while the issue is being taken up with Pakistan at government and military levels, directions have been given to Army commanders to respond immediately if provoked.
"India reserves its right to retaliate at the time and place of its choice. We won't remain passive when attacked," he said, adding he expected "commanders to be aggressive and offensive."
He said the ceasefire, in place since November 2003, has been holding except for "some aberrations" for which he squarely blamed Pakistan.
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