Although figures vary, it is estimated that India’s LGBT community stands at 8% of the population which translates to 104 million people. A long political struggle finally saw the striking down of a colonial law (Section 377 Indian Penal Code) that banned homosexuality in India in 2018. The change in legislation has hardly followed hot on the heels of India’s recognition of transgendered people as a third gender in 2014. Indeed the ‘third gender’ category, where Hijra and Khawaja Sira communities exist, was recognized earlier in Nepal (in 2007), Pakistan (in 2009) and Bangladesh (in 2013). Third gender recognition has come about because it has been gradually accepted that Hijras form part of these societies. However, legal recognition of the Hijras of India as third gender has not been easy in a country where colonial laws have persisted to outlaw homosexuality and any variant of gender. This paper therefore examines how colonial legislation misunderstood gender variance in India, not only because Hijras have been in existence since antiquity but also due to historical and scriptural understandings of gender variance. The paper looks at the simultaneous acceptance and rejection of the Hijra and Khawaja Sira communities in Indian society and shows how multiple religions are drawn on by those of Islamic faith. The paper also examines the context in which Muslim majority countries such as Bangladesh and Pakistan officially recognized a third gender and the impact of this on recognition in India.