50% of the month's wages, at most
All deductions in a wage period together may not exceed fifty per cent of the wages for it. An advance instalment counts towards that limit, alongside PF and the rest.
Source: Code on Wages, 2019, s.18(3)
Free Word file
Festival Advance Application Form for Indian Employers
An application your staff can fill, an approval that fixes the recovery, and a policy clause. The amount is your choice; the recovery has to fit inside half the month's wages.
- Amount, purpose, instalments, start month
- Recovery inside the fifty per cent limit
- Kept apart from an advance against bonus
Instant download. No card needed.
Attendo presents
Festival Advance Form
For Indian employers
3
formats, apply to approve
Attendo presents
What's inside
What is inside the form
Three formats. For a bonus advance, use the Diwali bonus letters instead.
01
The application
Amount requested, purpose, number of instalments and the month recovery starts, with the employee's agreement to recovery from wages.
02
Approval and recovery schedule
The sanctioned amount, interest if any, the instalments and what happens to a balance if the employee leaves.
03
Policy clause
Eligibility, the limit, recovery and leaving, for your employment terms. Every limit in it is yours to set.
Guide
The fifty per cent check
A worked example that fits the instalment inside half the month's wages once the month's other deductions are counted.
Guide
What the law leaves to you
No right to an advance and no legal maximum, but rules on recovery, the leaver's final pay and notice before changing a scheme.
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Advances, tracked to the rupee
Attendo (formerly Petpooja Payroll) records an advance repaid in instalments and deducts each one in payroll.
Why this matters
Why a festival advance needs a form
Because the advance is easy and the recovery is not. Paying out before Diwali takes a minute; taking it back over five months, inside the law, is where disputes start.
No law gives a right to a festival advance or caps it, so the amount is your policy. The Code on Wages does govern recovery: an advance is a permitted deduction, but all deductions in a month together may not exceed half that month's wages, the same limit the per-day salary sheet checks.
In the Central sphere, rule 19 adds that the advance's instalments in a month may not exceed half the wages, and the recovery goes in the Form IV register. Everyone else reads their own State's rules for the detail.
Staff leave in the festive months. Final wages are due within two working days, the half limit still applies, and the Code is silent on a balance left after that. A relieving letter that tries to take it all is the usual mistake.
And keep it apart from bonus. A festival advance comes back from wages; an advance against the statutory bonus comes off the bonus itself and never touches wages.
Preview
Three things the form settles
Each one is a question that otherwise comes up in March.
- The instalment. Fixed before payout and checked against half the month's wages once PF and other deductions are counted.
- The leaver. Settled or written off, decided in the approval, not argued at exit.
- The label. A festival advance, recovered from wages, not an advance against bonus.
| Line (an example) | Figure | How | Why | Provision | Format |
|---|---|---|---|---|---|
| Wages for the month | ₹18,000 | from payroll | The base for the limit | s.18(3) | 02 |
| Half of wages | ₹9,000 | 18,000 × 50% | All deductions together | s.18(3) | 02 |
| Less PF and other | ₹1,800 | from payroll | Already deducted | s.18(2) | 02 |
| Room for the instalment | ₹7,200 | 9,000 less 1,800 | The most it can be | rule 19 | 02 |
| ₹15,000 over 5 months | ₹3,000 | within ₹7,200 | Approve | rule 19 | 02 |
Key stats
Three numbers behind every advance
50% for the advance itself
Any or all instalments of an advance in a wage period may not exceed fifty per cent of the wages, and the recovery is recorded in Form IV. Central sphere; States make their own.
Source: Code on Wages (Central) Rules, 2026, rule 192 working days, for a leaver
An employee who resigns or is removed, dismissed or retrenched is paid within two working days, and the fifty per cent limit applies to that wage period too.
Source: Code on Wages, 2019, s.17(2)
Common mistakes
6 Festival Advance Mistakes Indian Employers Make
Taking more than half the month's wages
All deductions together are capped at half the month's wages. Spread the advance over more months rather than over-deduct.
Calling it a bonus advance
A festival advance comes back from wages; a bonus advance comes off the bonus under section 37. Use separate letters.
Clearing the balance from final pay
The half limit still applies to a leaver's last wage period. Settle any remainder with the employee instead.
Printing a legal maximum
No provision read sets a maximum festival advance. The limit is your policy; write it as yours.
No record of the recovery
In the Central sphere, advances and recoveries go in the Form IV register, alongside the other statutory registers.
Ending a yearly scheme without notice
Withdrawing a festival advance workers get every year is a change in usage. Workers get twenty-one days' notice first.
Comparison
A one-line advance slip against this form
A downloaded slip
Amount and a signature
- No recovery schedule
- Deducts whatever is needed
- Silent on a leaver
- Prints a 'legal' maximum
- Mixed up with bonus
Free either way
This form
Three formats and a check
- Instalments fixed at approval
- Inside half the month's wages
- Leaver's balance decided upfront
- Your limit, labelled as yours
- Kept apart from bonus
Approve it, then track it
Recovery runs for months. In Attendo every entry is logged until the balance is clear.
FAQ
Common questions
Is this festival advance form really free? +
Yes, completely. No card and no trial. The form asks for your name, work email, phone and city, then the Word file downloads straight away. The Attendo team may follow up about payroll software, and you are free to say no thanks.
Is there a legal limit on a festival advance? +
Not in any provision read for this form. No law gives an employee a right to a festival advance or sets how much it can be, so the amount is your policy. What the law limits is recovery: what you take back from wages each month.
How much of an advance can be deducted from salary each month? +
Under the Central rules, any or all instalments in a wage period may not exceed half the wages for it, and all deductions together may not exceed half under section 18(3) of the Code on Wages. So count PF and every other deduction first, and fit the instalment in what is left. State-sphere employers check their State's rule.
What happens if the employee leaves before repaying? +
If they resign or are removed, final wages are due within two working days, and the same half limit applies to that wage period. The Code does not say how a balance left after that is recovered, so the approval letter makes you decide in advance: settle it with the employee, or write it off.
Is a festival advance the same as an advance against bonus? +
No. A festival advance is recovered from wages. An advance against the statutory bonus is deducted from the bonus under section 37 of the Code on Wages and never touches wages. The approval letter in this form says in terms that it is not a bonus advance.
A
About Attendo
Attendo (formerly Petpooja Payroll) is payroll and attendance software used by 40,000+ businesses across manufacturing, corporate offices, retail, hospitals and education. General guidance, not legal advice. This form is one of our free HR formats, each built from the law rather than from other templates.
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Get the festival advance form
The application, the approval with its recovery schedule and a policy clause, in editable Word. Free, and no card.
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