The Bill also provides for 50 per cent reservation for women in local bodies.
"The Governor of Gujarat has signed the Gujarat Local Authorities Laws bill and gave sanction for its implementation to the state government," said State Assembly Secretary D M Patel.
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The Bill was sanctioned by the Governor three days back, he said.
As per the Bill, any person who fails to vote during local body polls, is liable for "punishment and will be penalised," though it did not explain the exact nature of action.
The Bill, passed twice by the BJP government under then chief minister Narendra Modi in the Legislative Assembly, had faced a stiff resistance from the former Governor who had taken the stand that the provision of compulsory voting is violation of Article 21 of the constitution.
The ex-Governor had not approved the Bill during her tenure, but after the change of guard at Raj Bhavan, Kohli has given his assent.
The Bill was first introduced on the floor of state Assembly in December 2009 and passed by a majority vote.
However, Dr Kamla returned it to the government for reconsideration in April 2010 with remarks that "forcing voter to vote is against the principles of an individual liberty".
"The present Bill violates the freedom which a citizen is entitled to enjoy under Article 21 of the Constitution.
Government should not have entered into a controversy to compel voters to act against their conscience by means of coercion," Dr Kamla had said in her letter asking the BJP government to make amendments to the Bill.