Religious observance and time off in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Observance of religious holidays in India does not follow a single, uniform rule. Employers have a legal obligation to provide a set of paid holidays each year, but the specific days — and how requests for additional time off are handled — depend on the applicable state rules, the establishment type, and your own leave policy.
What the law actually requires
India does not have a single central statute that mandates a fixed list of paid religious holidays for all employers. Instead, the framework comes from two main sources.
The Negotiable Instruments Act designates a small number of national public holidays — Republic Day, Independence Day, and Gandhi Jayanti. These apply everywhere.
For all other festivals and religious occasions, the governing rules come from state-level Shops and Establishments Acts, or from the Factories Act for manufacturing units. Each state publishes an annual list of compulsory paid holidays — typically between three and ten days — and a longer list of optional or restricted holidays from which employees may choose a specified number. The four consolidated Labour Codes, now in force from 2025, do not override this state-level holiday framework, so you still need to check the rules for each state where you operate.
The practical consequence: a business with offices in Karnataka, Maharashtra, and West Bengal will face three different compulsory holiday lists and three sets of restricted holiday rules.
Restricted holidays and optional leave
Most state governments publish a list of "restricted holidays" (sometimes called optional holidays) alongside the compulsory list. Employees are typically entitled to choose one, two, or three days from this list per year, depending on state rules.
This is the primary mechanism through which employees observe regional or minority religious festivals — Eid, Guru Nanak Jayanti, Christmas, Mahavir Jayanti, Paryushana, and dozens of others appear on these lists depending on the state. The employee informs their manager in advance, the day is recorded against their restricted holiday entitlement, and no general office closure is required.
Managing this well requires a leave management system that can track restricted holiday balances separately from earned leave and casual leave, and that gives managers visibility when multiple team members request the same date.
Handling requests that fall outside the official list
Employees sometimes need time off for a religious occasion that does not appear on their state's restricted holiday list. A wedding in the extended family, a local festival with strong community significance, or a pilgrimage are common examples.
There is no statutory right to paid leave for these occasions beyond what the leave policy already provides. In practice, most employers handle these requests by allowing the employee to use earned leave or casual leave. If no leave balance is available, the options are unpaid leave or a compensatory arrangement.
A written leave policy that is clear on this point prevents misunderstanding. It should state which leave types can be used for personal religious observances, what the advance notice requirement is, and how requests will be prioritised if several employees apply for the same date.
Payroll and compliance implications
A day off that is a compulsory paid holiday has no deduction from the employee's salary. A restricted holiday taken is similarly paid. Unpaid leave results in a loss of pay for that day, which feeds into the calculation of the employee's gross salary for the month — and affects the basis for EPF contributions, which are calculated on actual wages paid.
If an employee works on a compulsory public holiday — which may be necessary in customer-facing or manufacturing environments — most state acts and the terms of employment require that they receive either a substitute day off or an additional day's wages. Check the applicable state rules on this, as the exact entitlement varies.
Form 24Q, filed quarterly, should reflect the correct monthly salary figures after any loss-of-pay deductions, so accurate month-end payroll data matters for TDS compliance as well.
Building an inclusive leave policy
Beyond legal compliance, the way you handle religious leave sends a signal about the culture of the organisation. A few practical steps make the policy genuinely fair.
Publish the full list of compulsory and restricted holidays at the start of the financial year, not in response to individual requests. Make the process for requesting restricted holidays the same for everyone regardless of religion. If your workforce includes employees from multiple states, clarify which state's holiday list applies — typically the state where the employee is based.
Where operational constraints mean you cannot always approve a request on the exact date, offer a clear alternative: carry forward, compensatory leave, or use of earned leave. Employees are generally reasonable when the process is transparent and consistently applied.
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