Three other terrorists, however, managed to escape.
According to the CTD police, the gunned-down terrorist has been identified as Irfanullah, a commander of the banned Tehreek-e-Taliban Pakistan (TTP).
Police said a suicide jacket, grenade and weapons have been recovered from the possession of the slain terrorist.
According to a CTD spokesperson, Irfanullah was the mastermind of the Rawalpindi car bombing and planned to target sensitive installations and influential personalities along with his accomplices.
He said a CTD Multan team raided Khanewal to arrest the terrorists.