Police sources confirmed suspect Imran Ali had confessed to his crime before an investigation team.
Ali was known to the girl's family and would also frequent her house, police sources said.
They said Ali had been taken into custody over two weeks ago but was let go on the victim family's plea that 'he could not be a culprit'.
Punjab government spokesman Malik Ahmad told PTI that Ali had confessed to his crime but it would be confirmed whether he is the culprit or not after a DNA test.
"Imran Ali's DNA test is underway and hopefully we will have the report later in the day," Ahmad said, adding the suspect has been arrested from Pakpatan district of Punjab.
On January 5, the girl had gone missing while going to a religious tuition centre near her house in Kasur city, some 50km from Lahore. Her parents had been in Saudi Arabia to perform Umrah and she had been living with her maternal aunt.
On January 9, her body was recovered from a heap of trash near the Shahbaz Khan Road. Autopsy report had confirmed rape.
Police have carried out DNA test of more than 1,000 suspects. The Pakistan Supreme Court on last Sunday gave a 72-hour deadline to Inspector General of Police to arrest the culprit.
Violent protests gripped the Kasur city following the girl's murder that claimed two lives. The incident also stirred a national outcry demanding justice for her.
Last year, 4,139 incidents of child abuse took place in the province where 43 per cent of them were acquainted with perpetrators.
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