Dear riyarodeshia,
When you talk about two days, it is correct to some extent. In general, working for more than 48 hours in a week constitutes overtime, and an employee (especially a workman) is entitled to overtime allowance (OTA) at double the rates.
However, there are separate rules for workmen, office staff, or managers, and the policies vary from organization to organization. Also, consider the fact that senior executives and managers are exempt from several acts and hence cannot claim overtime. Moreover, in several public sector organizations, overtime has been abolished.
Public Sector Undertakings (PSUs)
PSUs, being model employers, have developed the policy of providing one day's extra wages and compensatory off as an incentive to compensate employees for the hardship of working on national/public holidays. This policy applies to employees whose rest/off day coincides with the holiday.
Private sectors, like the company you are with, can pay two days' salary or compensatory off—there is no restriction on having a better, improved compensation policy.
Warm regards.