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Conventional agricultural practices that rely heavily on blanket fertilizer recommendation, eventually leading to deteriorated partial factor productivity and N use efficiency. We investigated the effect of SPAD-based N-management on productivity and N use efficiency of rice and wheat in eastern India. Here, in the experiment three SPAD thresholds (34, 36 and 38 in rice and 38, 40 and 42 in wheat) using three N levels (15, 25 and 35 kg N ha−1) in split were incorporated as real-time N management (RTNM), one fixed-time N management (FTNM), farmers’ fertilizer practice (FFP) and control (No fertilizer) were introduced in wet and dry seasons for rice and wheat, respectively, during the years 2010 to 2012. Topdressing with 25 kg N ha−1 at medium SPAD (S36 in rice and S40 in wheat) increased soil N availability, leaf N content and grain yield of rice (5215 kg ha−1) and wheat (4483 kg ha−1) over the grain yield recorded under a low rate of N topdressing at low SPAD. While saving 33.3% N in rice and 18.8% N in wheat, the agronomic N use efficiency (58.5% in both rice and wheat) and nitrogen recovery efficiency (32.2% in rice and 15.1% in wheat) can be increased when compared with conventional FTNM. The SPAD-based management strategy showed great promise in efficient management of N fertilizer, and we estimated the optimal SPAD threshold for rice and wheat as 37.5 and 41.8, respectively.