The accident took place around 10:30 am (local time) at Malshej Ghat of the Thane district near Pune city when the bus driver lost control of vehicle at a steep curve on the treacherous hilly road.
Helped by local villagers, police and fire brigade personnel from Thane and Pune are engaged in the rescue operations in the steep mountain slopes.
Several wounded people were rushed to hospitals in Murbad and Thane.
The toll is likely to go up, police said.
A previous TV report said the bus plunged into the gorge after being rammed by a truck.
Road accidents take place frequently in India, mainly due to reckless driving, bad road conditions and over-packing of passengers. An estimated 100,000 people are killed each year on the road in various accidents in India.