Police officials said casualties were feared, but no precise figures were available. It is not known how many passengers were in the bus at the time of the accident.
The accident occurred near the floating restaurant near Sirhind town along National Highway No. 1 (NH-1) between Ambala and Ludhiana.
"The flow of water in the canal is high and divers are being engaged to locate the bus," said a police officer in Fatehgarh Sahib, 60 km from here.
Fatehgarh Sahib district police chief Gurmeet Singh Chauhan said efforts were on to rescue trapped passengers.