Tax policy plays a pivotal role in shaping education funding in India, directly influencing the availability and quality of educational resources across various levels. This paper evaluates the impact of tax policy on education financing in India, highlighting how direct and indirect taxes, along with specific levies like education cess, contribute to the overall budget allocation for education. The analysis reveals that while the Indian government has made strides in increasing educational budgets through taxation, disparities in revenue generation between states lead to significant inequities in educational quality and access. Furthermore, the implementation of the Goods and Services Tax (GST) has introduced complexities in funding educational institutions, particularly private entities that are subject to taxation, potentially raising the cost of education for families. Economic fluctuations and fiscal policies also impact tax revenue, subsequently affecting educational budgets during periods of economic contraction. The reliance on earmarked funds, such as the education cess, is examined in light of its limitations in addressing the broader educational funding challenges.