The arrested duo was identified as P Venkat Rao (34), a welder by profession and a close relative of the victim, and M Chakradhar (45), a TV mechanic, police said.
The alleged murder had taken place on August 26 at Tagarapuvalasa area under Bheemili police station limits in the city.
"It was a case of murder for gain. Stolen valuables -- four gold bangles, gold chain and gold ear-rings -- were recovered from the duo," DCP (Crime) T Ravi Kumar Murthy said.
The duo first strangulated the victim Atchayyamma, slit her throat with a knife and decamped with her jewellery, he added.
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"The accused Venkat Rao had worked as a welder in Hindustan Shipyard Ltd till 2001. Thereafter he left for Singapore and worked till 2007. On return, he duped many people to the tune of Rs 15 lakh under the guise of sending them to Singapore for jobs through his fake placement consultancy," Murthy said.
Venkat Rao had befriended with M Chakradhar about four years ago and decided to make some quick money and Venkat had hatched a plan to rob Atchayyamma.
Further investigation into the case is on.