On 4 September 2026, the Karnataka Government notified the Karnataka Shops and Commercial Establishments (Amendment) Act, 2026.
The Amendment Act received Governor’s assent on 3 September 2026 and came into force with immediate effect.
The Act exempts certain establishments from duplicate registration, mandates the issuance of service certificates to employees, prohibits employers from retaining original documents, and substantially revises compounding and penalty provisions.
Key Points:
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The Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 seeks to simplify regulatory compliance, expand digital processes, strengthen employee protections, and revise penalty provisions under the Karnataka Shops and Commercial Establishments Act, 1961.
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The newly inserted clause (k) under Section 3 provides that establishments employing 10 or more workers and already registered under the Occupational Safety, Health and Working Conditions Code, 2020 are exempt from separate registration under the Act.
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No separate registration is required for godowns or storage facilities located within 100 metres of the principal establishment.
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Applications for registration, issuance of certificates, renewals and related compliances must be processed through electronic or digital modes.
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The time limit for disposal of certain registration-related matters has been reduced from 30 days to 7 days, under Section 4 (3A).
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Registration issued under Section 4 will remain valid until the closure or cessation of business, eliminating the need for periodic renewals.
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Employers are required to issue a service certificate to an employee within seven days of receiving an application from the employee.
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New Sections 6-B and 6-C prohibit employers from retaining an employee’s original educational certificates, experience certificates, or other original documents at the time of appointment or during employment.
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References to the Payment of Wages Act, 1936 and the Workmen’s Compensation Act, 1923 have been updated to align with the Code on Wages, 2019 and the Code on Social Security, 2020, respectively.
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The amendment omits several transport and safety-related compliance requirements under Section 25, including obligations relating to driver verification, route monitoring, security arrangements, control rooms, and emergency assistance measures for women employees.
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Penalties under various provisions have been increased, including fines for contraventions relating to Sections 24 and 25, which now attract a minimum fine of Rs. 10,000.
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The fine for obstructing Inspectors under Section 33 has been increased from Rs. 500 to Rs. 10,000.
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The Act introduces a revised framework for compounding of offences, permitting compounding upon payment of 50% of the prescribed fine for a first offence and 75% for a second or subsequent offence.
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An offence of the same nature cannot be compounded if committed more than twice within a period of one year.
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The amendments provide a statutory right of appeal against orders passed under the compounding provisions. Appeals must be filed within 30 days and disposed of within 60 days.
Also Read: Karnataka Shops and Commercial Establishments (Second Amendment) Act, 2020
[Karnataka Shops and Commercial Establishments (Amendment) Act, 2026, dated 4-9-2026]
