Police said that the arrested has been identified as Balvinder Singh, a resident of Mandoli Road, adding that Singh is also a relative of both victims.
On May 21, beautician Jasbir Kaur (36) and her daughter Prabhjot Kaur (14) were found dead while Jasbir's son Jaspal was found injured at their residence.
According to police, Balvinder Singh, who took a loan of Rs 1.5 lakh from a person to meet his expenses, was in the habit of drinking and had hatched a plan to rob the victims' house and then kill them to clear his debt.
During investigation, it was noticed that Balvinder did not participate in the cremation, he said.
Balvinder was later arrested and the hammer, blood stained clothes, and a mobile were recovered from his possession, the officer said.