The present research work describes the synthesis of a nanocomposite hydrogel [BFO/Mr-cl-poly(AAm)-IPN-poly(AA)] from nano bismuth iron oxide (BFO) synergistically coupled with interpenetrating network (IPN: Mr-cl-poly(AAm)-IPN-poly(AA)) of acrylic acid (AA) created within crosslinked network of a semi-IPN (Mr-cl-poly(AAm)). Semi-IPN was previously synthesized from N, N′-methylene bisacrylamide (MBA) crosslinked (cl) network of polyacrylamide (poly(AAm)) grafted onto aqueous extract of Commiphora mukul (Mr). The synthesized sample was efficient in removal-degradation of Coomassie brilliant blue G-250 (CBB) dye. Nanocomposite (NC) was magnetic as well as photocatalytic. Initially, optimization of the reaction parameters was carried out using Response Surface Methodology (RSM) design. Significant variables were accessed using Minimum Resolution V design and further optimized conditions were evaluated with central composite design (CCD). Semi-IPN showed maximum % swelling of 833.8% showing interdependence of time-temperature and solvent-crosslinker concentration. IPN synthesized gave maximum swelling of 285.8%. On insertion of BFO nanoparticles, the NC synthesized could remove-degrade a maximum of 90.4% dye in sunlight and 88.6% in UV–visible light under optimized parameters: 600 mg NC dose, 10 ppm initial dye concentration, pH 7.0, removal and degradation time 25 h and 4 h, respectively. The whole process showed second order kinetics with Elovich model criteria and followed Langmuir adsorption isotherm. GC-MS analysis gave low molecular weight products as an evidence of degradation process. Also, the NC synthesized can be recycled for industrial use.