The bunkers were removed by municipal officials from the main market area of the town in north Kashmir, around 60 km from Srinagar.
Locals have demanded naming the square after Nayeem Bhat, a 19-year-old cricketer who was killed in the firing.
Handwara became a battleground after an alleged molestation by an Army jawan of a school girl. Stones were pelted by locals on Army personnel. In response the Army fired killing two at the time. The death toll rose to five in subsequent days. A mob surrounded the main army bunker and set fire to it.
Officials have put up a board declaring that the spot would be turned into a public park.
Meanwhile, the police have arrested Hilal Ahmed Bandey, one of the two accused in the molestation. Bandey was among the two persons named by the girl in her statement before Chief Judicial Magistrate. He is accused of manhandling the girl on April 12 while she was stepping out of a public restroom in Handwara town.
The district administration Kupwara has also suspended five government employees for allegedly provoking youth to take part in stone pelting.