Taliban fighters ambushed a convoy of three buses in Kunduz province, abducting the almost 200 passengers aboard - most of whom were civilians traveling to the capital, Kabul, for the holiday, according to Reuters.
The Trump administration urged the Taliban to participate in a cease-fire offered by Afghan President Ashraf Ghani, saying it was time to end America's longest war.
Abdul Rahman Aqtash, police chief in neighboring Takhar province, said the passengers were from Badakhshan and Takhar provinces and were traveling to the capital, Kabul.
The Taliban have resurged in recent years, seizing districts across the country and regularly carrying out large-scale attacks.
"So far, there is no news on the fate of the passengers, but tribal elders and local officials are trying to negotiate with the Taliban", Ayubi added.
Speaking during a gathering to mark the 99th Independence Day of Afghanistan, President Ghani said the government announces ceasefire with the Taliban, starting from Monday until Eid Milad un Nabi (Birth of Prophet Mohammad), on the condition that the Taliban group also announces a ceasefire. The heavy casualties underscore the challenges the government in Kabul faces since the US and North Atlantic Treaty Organisation officially ended their combat mission at the end of 2014. The group later rejected a call by the president to extend it.
But one of the Taliban commanders said the June ceasefire had only helped USA forces, who the Taliban are trying to drive out of the country, and Taliban leader Sheikh Haibatullah Akhunzada rejected the new offer on the grounds it would only help the US -led mission. The insurgents, however, have no plans to officially announce the truce, the sources said.
On Saturday, the leader of the Afghan Taliban, Maulvi Haibatullah Akhunzadah, said that there will be no peace in the country as long as the "foreign occupation" continues.
Akhundzada said the militant group wanted "sincere, transparent, and result-oriented negotiations" with Washington, adding that any peace settlement negotiated between the two sides must "preserve our Islamic goals, sovereignty of our homeland, and ensure an end to the war".
Provincial Governor Naqibullah Fayeq said on August 19 that the Balcharagh district fell into the hands of Taliban fighters late on August 18 following several days of heavy clashes because the Afghan soldiers did not receive reinforcements.
"Unfortunately, some of my relatives are among the kidnapped passengers and we don't have any information about their whereabouts", Hamid Mubarez said.
Mir Ahmed, who lives near where the attack took place, said the Taliban exercise effective control over the district. "Even during the day, they can only go in with full force and air support".