The dog sniffed its way to a mound of sand at the site and stood there, implying that it had picked up a scent from the clothes that the child was wearing, a police officer said.
Ram Niwas, the guard who went missing, was arrested on Friday near Shamshan Ghat, Mandoli, the officer said.
The boy, the son of a tea stall owner, had gone missing on August 11 while returning home from his father's shop. His body was found at a nursery near the construction site on August 12, a few hours after a police case was filed.
Police said the accused knew the boy as he used to bring tea for him. The guard allegedly sodomised the boy after drinking and strangulated him, Deputy Commissioner of Police (northeast Delhi) AK Singla said.
Police said Ram Niwas in 2009 also allegedly kidnapped and killed a six-year-old.