After investigation, Waris and Nadim were arrested from old Ghaziabad bus stand around 5.30 pm, Circle officer City 1st, Anil Kumar Yadav said, adding that their accomplice Sameer is still at large.
A country-made pistol, which was allegedly used to shoot her, and a knife have been recovered from their possession, he said.
During interrogation, the duo confessed that they murdered Daya Rani to usurp her wealth which ran into several crores, he said.
Also, Waris held a grudge against Daya after he got married to her niece Geeta, much against her (Daya's) wish. Later, Daya she let Geeta and her child stay at her house but did not allow Waris, he said.
The duo have been arrested, the CO said, adding that police are raiding various hideouts to nab Sameer.
65-year-old Daya Rani Kinner, who had contested Lok Sabha, Assembly and civic elections, was found dead on July 4 with a gunshot wound on her head at her residence in Gau Shala Phatak area.