Karnataka Shops and Commercial Establishments (Amendment) Act, 2026: Key Changes and Business Impact

The Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 (“Amendment Act”) has introduced targeted changes to the Karnataka Shops and Commercial Establishments Act, 1961 (“Karnataka S&E Act”), primarily to simplify establishment-level compliances, align the framework with the new labour codes and introduce certain employee-related obligations. The Amendment Act came into force on September 04, 2026.

The earlier position

Under the Karnataka S&E Act, establishments were required to obtain registration within thirty days of commencement of business. The registration certificate was valid for five years, following which renewal was required. The Karnataka S&E Act also did not expressly prohibit employers from retaining employees’ original educational or experience certificates, or prescribe a specific timeline for issuance of service certificates.

What has changed?

The Amendment Act introduces, among other changes, the following key measures:

• Simplified and digital registration: Establishments employing ten or more workers and registered under the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”) are exempt from obtaining separate registration under the Karnataka S&E Act. The amendment also provides that no separate registration is required for certain godowns or storage facilities situated within hundred meters of the principal establishment. The registration framework has also been transitioned to an electronic mode. Additionally, the existing five-year validity and renewal requirement has been removed. Registration will remain valid until the establishment ceases operations.

• Employee documentation: Employers are now expressly prohibited from retaining employees’ original educational, experience or other documents. Further, employers are required to issue a service certificate within seven days of receiving a request from an employee.
  

What this means for businesses

The amendments are expected to reduce recurring administrative compliance, particularly for establishments already registered under the OSH Code. The removal of periodic registration renewal will also eliminate a recurring compliance activity for businesses.

However, businesses should review their HR and onboarding processes to ensure that original employee documents are not retained and that service-certificate requests are processed within the prescribed seven-day period. Businesses should also assess their existing registrations to determine whether they qualify for the new exemption.

The Amendment Act moves Karnataka towards a simpler and more streamlined compliance framework, while introducing specific obligations for employers in relation to employee documentation and service certificates. Businesses should treat these changes as an opportunity to rationalise their establishment-level compliances, while undertaking a targeted review of their registration status and HR processes to ensure timely compliance with the amended requirements.