Tension prevailed at Katipalla when the body of Deepak Rao was taken to his home by the police without allowing a funeral procession planned by his family and various right- wing groups.
The Dakshina Kannada district administration later allowed the procession to be taken out from his house to the cremation ground, accepting the bereaved family's demand.
Deputy Commissioner Sasikanth Senthil and city police commissioner T R Suresh succeeded in convincing the family and activists of various Hindu organisations not to insist on the state home minister's presence before the body could be taken home.
Senthil said the family would soon receive the Rs10-lakh compensation announced by the government.
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RSS leader Kalladka Prabhakar Bhat alleged that the government has been adopting an "anti-Hindu policy".
The 28-year-old Rao, who was associated with the Bajrang Dal and the Vishwa Hindu Parishad, was killed by a four-member gang yesterday.
They were arrested within hours after the attack.
Earlier, right-wing activists and Rao's parents did not allow the body to be brought out of the ambulance, the police said.
Hindu organisations had decided to take the body from the hospital to his house at Katipalla in a procession, but sensing trouble police had taken it to the residence.
A bandh was observed in Surathkal and Katipalla areas in the district as a mark of protest.
Right-wing leaders and others staged a protest at Ganeshkatte in Surathkal where a large crowd gathered.
The protesters raised slogans against the police and the state government and demanded justice for Rao's family.
They wanted the state home minister to personally visit the family.
Two incidents of violence were reported late last night from Kottara Chowki and Surathkal areas, the police said.
He has been admitted to a hospital with head injuries.
At Kottara Chowki in the city, a 47-year-old man was attacked by a group of persons late last night when he was returning home after shutting his shop.
His condition is said to be serious, the police said.
Strongly condemning the "cold-blooded murder", BJP leaders R Ashok and Ashwathnarayana have demanded an NIA probe into it.
They alleged that the Congress government in the state had allowed "jihadi forces" to have a field day and to indulge in "wanton killings" of Hindu workers in pursuance of its "vote-bank politics" and minority appeasement.
A series of killings of "Hindu activists" has often caused tension in the communally-sensitive Dakshina Kannada district in the coastal region.
The BJP has been accusing the Congress of adopting "a soft approach" towards "jihadi forces", a charge dismissed by the Siddaramaiah government, which has accused the saffron party of trying to polarise the situation.
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