As the word suggests, restricted holidays are the holidays that vary from state to state. An employee can avail these holidays from the list of restricted or gazetted list of holidays. The office is not closed on this day. The holiday is just for the employees. For instance- New year, Makar sankranti, etc.
Restricted holidays are the holidays which an employee can avail from the list of Gazetted/restricted holidays. Further these are the holidays only for employee and not for the organization or government departments. Their offices do not close at that day.