The auto-rickshaw, in which the victims were travelling, tried to overtake a bus and in the process collided head-on with another bus, SSP (Pathankot) Rakesh Kaushal said.
The dead were two girls Ruby and Subaya, both aged 16 and residents of Pathankot, he said.
The injured included the driver of the auto-rickshaw, the SSP said.
Punjab Chief Minister Parkash Singh Badal expressed anguish over the accident.