Direct taxes are taxes that are paid directly to the government by the taxpayer and cannot be shifted to any other person or group. Examples of direct taxes include income tax, real property tax, personal property tax, and taxes on capital gains. On the other hand, indirect taxes are taxes that can be passed on or shifted to another person or group by the person or business that owes it. Businesses may recover the cost of the taxes they pay by charging higher prices to customers, paying lower wages and salaries, paying lower dividends to shareholders, or accepting lower profits. Examples of indirect taxes include sales tax, excise tax, value-added tax (VAT), and goods and services tax (GST) .

To summarize, direct taxes are paid directly to the government by the taxpayer and cannot be shifted to any other person or group, while indirect taxes can be passed on or shifted to another person or group by the person or business that owes it.