Table of Content
The Karnataka Shops and Commercial Establishments law has now been amended, bringing a number of practical changes for employers across the State.
The Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 received the Governor’s assent on 3 September 2026 and was published in the Karnataka Gazette on 4 September 2026 as Karnataka Act No. 38 of 2026.
The legislation was earlier introduced as LA Bill No. 23 of 2026. With the legislative process now complete, the proposed changes have become enforceable law. The Act states that it shall come into force at once.
For employers, this means it is time to review existing registration records, HR practices and compliance processes against the amended provisions.
Official Gazette Notification:
View the Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 Gazette Notification
The 2026 amendment touches several areas of day-to-day compliance.
Registration can now remain valid until the business closes, more registration-related activities are moving to digital mode, and certain establishments already registered under the OSHWC Code may receive relief from separate registration.
The Act also introduces two important HR obligations: issuing service certificates within seven days of an employee’s application and not retaining original employee documents.
Penalties have also been revised, along with new provisions dealing with compounding of offences and appeals.
The amendment also brings electronic or digital mode into several parts of the registration process.
This includes submission of registration-related information, payment of fees and issue of certificates. Notification of closure is also to be made through electronic or digital mode.
Another change relates to the time available to the Inspector under Section 4(3A). The earlier period of 30 days has been reduced to seven days.
This should not be confused with the general registration timeline for a new establishment. The seven-day period relates specifically to the Inspector’s decision under that provision.
Businesses setting up operations in Bengaluru can refer to our Shop and Establishment Registration in Bangalore page for assistance with registration requirements.
The amendment introduces a new Section 3(k) for establishments employing 10 or more workers that are already registered under the Occupational Safety, Health and Working Conditions Code, 2020.
Such establishments may not require a separate registration under the Karnataka Shops and Commercial Establishments Act.
The condition relating to OSHWC registration is important. Merely employing 10 or more workers does not, by itself, create an exemption.
Businesses with several offices or establishments should therefore verify the registration status of each location before relying on this provision.
Make sure your workplace policies and statutory practices are aligned with the latest Karnataka Shops and Commercial Establishments requirements.
One of the key changes under the 2026 amendment is the removal of the earlier five-year registration and renewal cycle. Under the amended Section 4(5), a registration will now remain valid until the closure or cessation of business of the establishment.
The renewal provision under Section 4(6) has also been omitted, removing the requirement for periodic renewal of the registration certificate. Employers should therefore review their existing compliance calendars and update any renewal-related processes.
The amended provision also deals with godowns and storage facilities situated close to the principal establishment.
A separate registration is not required for a godown or storage facility located within 100 metres of the principal establishment, subject to the conditions under the Act.
This can be relevant for retail businesses, distributors, logistics companies and other organisations that operate storage facilities near their main premises.
Employers should still verify the location and registration structure before making changes to any existing registration.
Not sure what changes your business needs to make after the 2026 amendment? Our labour-law experts can guide you.
The Act introduces a new Section 6-B.
Every employer must issue a service certificate to an employee within seven days from the date of receiving the employee’s application, in the prescribed form.
For HR teams, this means service certificate requests should be tracked properly.
A simple internal process should record when the request was received, verify the employee’s service details and ensure that the certificate is issued within the required period.
The newly inserted Section 6-C prohibits employers from retaining an employee’s original documents.
This includes:
The restriction applies both at the time of appointment and during employment.
Employers that currently collect or retain original certificates as part of onboarding should review this practice immediately.
Documents may need to be checked for verification, but the original documents should not remain in the employer’s custody.
The amendment also updates references to older Central labour laws.
References to the Payment of Wages Act, 1936 under Section 21 have been replaced with the Code on Wages, 2019.
Similarly, references to the Workmen’s Compensation Act, 1923 under Section 22 have been replaced with the Code on Social Security, 2020.
Employers should check appointment letters, HR policies, compliance manuals and other internal documents that still refer to the older legislation.
The amendment omits clauses (h) to (o) of Section 25(1), removing several detailed operational requirements relating to women working during night shifts.
However, important safeguards continue to apply, including written willingness, free transport with GPS, adequate security, employment on rotation, security guards during night shifts, separate rest rooms and washing facilities with privacy, and employer-borne crèche costs.
Certain detailed requirements, such as driver bio-data and pre-employment screening, supervisory scheduling of pick-up and drop routes, non-disclosure of women employees’ contact details, the “not picked up first / dropped last” rule, random vehicle checks, control room or travel desk requirements, and emergency-signal mobile applications have been removed.
Employers should review their existing night-shift policies against the amended provisions while continuing to maintain appropriate safety, transport and welfare measures for women employees.
The Amendment Act increases several penalties and removes imprisonment from some provisions.
Some of the key changes are:
| Provision / Violation | Revised Penalty |
|---|---|
| False deemed-registration claim under Section 4(8) | Fine up to ₹50,000 |
| First offence under Section 30(1) | Fine up to ₹3,000 |
| Second or subsequent offence under Section 30(1) | Fine up to ₹5,000 |
| Certain offences under Section 30(2) | Fine up to ₹2,000 |
| Contravention of Sections 24 and 25 | Fine of not less than ₹10,000 |
| Obstruction of Inspector | Fine up to ₹10,000 |
The revised penalty structure means employers should review even routine compliance gaps rather than allowing them to remain unresolved.
The amended Section 33-A introduces a revised mechanism for compounding offences.
The jurisdictional Labour Officer may compound an offence by collecting:
However, an offence of the same nature cannot be compounded if the same person commits it more than twice within one year.
The Act also provides that a penalty should not be imposed without giving the concerned person a reasonable opportunity of being heard.
The client’s compliance update confirms the same 50% and 75% compounding structure.
Stay compliant with Karnataka’s updated Shops and Commercial Establishments requirements with practical support tailored to your business.
A new Section 33-B provides a right of appeal against an order passed under the compounding provisions.
An appeal must be filed within 30 days from the date of receipt of the order.
The fine ordered must be deposited before the appeal can be entertained.
The Act also provides for the appeal to be disposed of within 60 days, and the appellate authority must be an officer not below the rank of Assistant Labour Commissioner.
Since the amendment is already in force, employers should review their current Karnataka Shops and Commercial Establishments compliance rather than continue treating these provisions as proposals.
The first area to check is registration.
Businesses should identify which establishments are affected by the new registration-validity provision and whether any establishment may qualify for the OSHWC-related registration relief.
Godowns or storage facilities located within 100 metres of a principal establishment should also be reviewed.
The second area is HR documentation.
Employers should make sure that original employee documents are not being retained and that there is a clear process to issue service certificates within seven days of receiving an application.
Policies and templates that still refer to the Payment of Wages Act or Workmen’s Compensation Act should also be reviewed.
The amendment should be considered along with related employer obligations such as working hours under labour law in India and leave policy requirements in India.
One of the main mistakes employers should avoid is continuing to refer to the amendment as only a proposed Bill.
The legislation has completed the legislative process and is now an enacted law.
Employers should also avoid assuming that:
Businesses that need a wider review of their statutory obligations can refer to our Labour Law Consultancy Services in Bangalore.
The Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 changes several familiar compliance practices for employers in the State.
While lifetime registration may reduce recurring administrative work, the changes relating to employee documents, service certificates, digital compliance and penalties require closer attention from HR and compliance teams.
Vishaal Consultancy Services assists businesses with Shops and Commercial Establishments Compliance, including registration, documentation and ongoing statutory compliance.
Businesses in Bengaluru can also get support with Shop and Establishment Registration in Bangalore.
For the complete statutory text, refer to the official Gazette Notification below:
Need help translating the 2026 amendment into practical HR, payroll, and workplace policy changes for your business?
See Related Blogs
BLOGS
BLOGS