The hydrostatic (εhy) and biaxial (εbi) strain in lateral (x) and growth (z) direction have been computed and compared for InAs quantum dot (QD) with different capping. The capping layers are: GaAs, InGaAs/GaAs, InAlGaAs/GaAs, InGaAs/InAlGaAs/GaAs, InAlGaAs/InGaAs/GaAs, and the total thickness is kept constant for all QD structures. The strain distribution is mainly confined within the dot and dies down towards the capping layer. The movement of conduction band edges is controlled by hydrostatic strain. QDs capped with InAlGaAs/InGaAs/GaAs and InAlGaAs/GaAs shows lower magnitude of εhy, which indicates better carrier confinement as compared to other capping. The electrostatic potential obtained for the InAlGaAs capped QDs is larger (~0.5 V) than other structures. The valence band splitting into the heavy hole and light hole depends on the biaxial strain. It is observed that GaAs and InAlGaAs/InGaAs/GaAs capping has the smallest and largest values of εbi respectively in the growth direction. The GaAs capped QD structure has a smaller εbi, which would increase the energy of the ground state hole, leading to blue shift in photoluminescence spectrum. However, the ground hole state has a lower energy due to larger εbi in InAlGaAs/InGaAs/GaAs capped QD, which results in a red shift in the photoluminescence spectrum (~1.35 μm at 300 K). Nonetheless, InAlGaAs capped QDs shows better results in the lateral direction also. Thus, based on the strain profile, QDs capped with InAlGaAs as the first capping layer is the optimized structure which can be useful for various optoelectronic applications.