A direct tax is a type of tax that is paid directly to the government by the person or entity on whom it is imposed. Capital gain tax is an example of a direct tax because it is a tax on the profit made from selling an asset such as property, stocks, or other investments. Import duty and export duty are types of indirect taxes because they are levied on goods and services and paid by the consumers indirectly. Sales tax is also an indirect tax because it is collected by the seller from the buyer and paid to the government.