"It was a dastardly act as they have taken away the head," he added.
Military sources had earlier indicated that the soldier had been decapitated but Dahiya said he was only able to confirm the beheading on Wednesday afternoon after the victim's next of kin had been informed.
A Pakistan military official has denied that Pakistani troops fired on Indian troops or killed any Indian soldier in Tuesday's incident in the border region.
However Dahiya rejected the Pakistani response.
"They seem to be in a state of denial," he said.
"We are absolutely convinced Pakistan army regulars were involved because it was a surgical strike with high calibre weapons.