Rice–wheat (RW) cropping system in India is a major source of N2O emissions. In such system, defining N rates that deliver minimal N2O emissions and economically optimum yield would benefit both food production and the environment. We measured yield and N2O fluxes from RW systems in Northwest IGP under two tillage systems and five N rates (0, 75, 150, 225 and 300 kg N ha−1) for both rice and wheat using static chamber method. Seasonal pattern of N2O emission was mainly influenced by fertilizer and water application events with no significant effect of tillage systems. Mean annual N2O emission from RW system was 1.49 kg N ha−1 in N75 plot and 2.97–3.04 in the plots receiving ≥150 kg N ha−1. On average, the yield-scaled N2O emissions of rice and wheat were 0.25 and 0.52 kg N2O–N mg−1, respectively. Our finding suggests that N rates between 120–200 kg N ha−1 in rice and 50–185 kg ha−1 in wheat provide the most economical returns and application rates beyond these ranges would be both economically and environmentally unsustainable. Within the range of N rate studied, fertilizer-induced N2O-EF for rice and wheat were 0.41% and 0.79%, respectively.