Sepoy Irfan Ahmad Dar, 23, a resident of Senzen village in Shopian, was a serving soldier.
The body of the official was recovered from an orchard area in Watmullah Keegam area of Shopian, a police official said.
Dar had reportedly gone on leave 10 days ago and had gone missing yesterday.
Chief Minister Mehbooba Mufti has strongly condemned the killing.
Police are investigating the incident and suspect it to be an act of militants.
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"The murder of young Irfan Dar is a very tragic & reprehensible act".
National Conference leader and former chief minister Omar Abdullah also took to Twitter to condemn the incident. "My unqualified condemnation & heartfelt condolences to his family".
Sepoy Irfan Ahmad Dar, posted with175 Territorial Army (Engineers) in Bandipora, had left home at Senzen village in his auto on Friday but did not return.
He belonged to neighbouring Kulgam district and had come on leave to attend his cousin's marriage.
The police has not ruled out the possibility of militants involved in the kidnap and murder.
On September 27 evening, an off-duty BSF man Mohammad Ramzan Parray was killed and four of his family members injured in the gun and knife attack of militants at his residence in Hajin area of north Kashmir's Bandipora district.