Shahbaz Ahmad, struggling under a 700,000rupees debt, planned to kill Sabiha to secure the compensation from Punjab government, a senior police officialtold reporters.
After throwing his daughterinto thecanal, Ahmad lodged a false complaint with the police on Tuesday that his daughter had been kidnapped while going to school at Jakhar village near Kotla, some 150 kilometres from Lahore.
The police found the girl's body floating in the canal near Randheer village.
Ahmad told the police that he needed the amount to pay off his debts.
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"On Tuesday, Ipicked Sabiha from thehouse on the pretext of dropping her at school, but instead took her to the canal bank and threw her into deep waters," he said.
A murder case has been registered in this connection.
There has been a surge in cases of child abduction in the province and "special compensation" has been announced by the Punjabgovernment for the families of the victims.
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