There are so many religions and every religion believes that there is some God. There are good people who want to do good Karma. Why is the need for so many religions and why isn’t there only one Dharma, when everybody believes there is only one Bhagwan (God)?
Please note that this answer is not the author's own: This answer is a direct English translation of Shri Jagannath Puri Shankaracharya ji's answer to a similiar question. He answers the question in Hindi in this link How Does Hindu Dharma Differ from Other Religions? Editing this answer so that due credit and proper reference can be provided to the response.
What is Dharma?
First thing is, Is the word ‘Dharma’ used in the Bible?...or is it used in the Quran Sharif? Secondly, don’t we know the name, age and period of the creator these religions? These are creations of mind of a particular person/s and we call their created religion as ‘Dharma’ only due to our own magnanimity. If we apply the principles of Dharma, do they qualify as Dharma, this is what we need to ponder upon.
It is due to our magnanimity, we call these sects, their beliefs, their theories as Dharma. If we apply the actual definition of Dharma... do these qualify as Dharma? In English, they would call it ‘Religion’ only.
Dharma can’t be translated as religion anyways. The sense in which word Dharma has been used in Vedic literature.
Jains and Buddhists may not consider themselves as Vedic, but they have taken the word Dharma from the Vedas only. They have taken ‘Omkar’ from Vedas only.
If we were to call a drop of water as Ocean or if a spark of fire as fire, there is a lot of difference. That’s why, the way we define Dharma, all these stand nowhere near it.
One of my Guru's disciple in Vrindavan used to lie a lot. His father was in the Police force. Guruji told his disciple's father that the son lies a lot, the father agreed and said he himself too feds up of his lies. Guruji told him it will be good if his son does LLB (Law). The disciple was already a "Masters in History" and father said, he will teach him law himself. Guruji thought that he was not an LLB and in fact didn’t study after Intermediate. His father said that "I arrest people under particular sections of a particular law”. Person who think that he knows Law because he can charge somebody by the rules of that Law is a fool.
In the same way, if a particular stream of waterbody like Gangnahar, went somewhere, it does not become that river. We should search the origin of that stream.
Like that, all the Religions are born from the Sanatan Dharma.
10th Mandala of Rigveda which is the 'Nasadiya Suktam' talks about Absolute Dharma:
Nasadiya Suktam has only 7 mantras and scientists world over are still engrossed into these as in that nature of the universe is explained in those seven mantras, no scientists can ever negate this and in fact is bound to follow that.
So, what I have said is that any stream of Dharma due to which humanity somehow survives, if it reaches somewhere, it doesn’t mean that it is absolute Dharma. The whole Dharma is Vedic Dharma only which is the oldest.
Let’s talk about other thing i.e. Ishwara (God)
In one and other Ishwara, there could be difference of earth and sky. You would be amazed to know that there is a difference in two Ishwara itself and there could be wicked Ishwara as well.
The Ishwara created out of the imagination of a human is not an Ishwara. Babas (Spiritual Gurus) is also being called Ishwara today.
Bhamti Kar Vachaspati Mishra ji has used a word, 'Vidur prabhavit kanta sakshatkar'( विदुर प्रभावित कांता साक्षात्कार ). Vidhur is a person whose wife has died. If he meditates about this wife in his imagination and due to the strength of his feelings, he can have a glimpse and can even be able to touch her. This is called “Vidur prabhavit Kanta Sakshatkar” ( विदुर प्रभावित कांता साक्षात्कार ) by Bhamtikar Vachaspati Mishra Ji. But this is not real.
In the same way, there are many kinds of Ishwara. If any Ishwara is created with the imagination of emotional people, that is not real Ishwara as it doesn’t have the traits of Ishwara.
Similarly, if a person believes in an Ishwara only due to his inference, then too that Ishwara is not real Ishwara. Why not? The imaginary Ishwara born out of the sentiments of an emotional person can not become real Ishwara. It is like the emotional person who saw his dead wife in his dream world.
Neither is the Ishwara proven with the power of inference of such logic can not be proved to be the true Ishwara.
Once I told someone the same thing. He didn’t say anything that moment, but later said, “I have been a lawyer...do pardon me, I didn’t like this argument of yours that any Ishwara proved with the power of inference of logician, is not Ishwara. I disagree with this. The inference should be the proof.” I said, “Not at all.”
I explained to him — when will logic prevail by giving reference from the Shankara Bhasya on Kena Upanishad. At a far off place, we see smoke on a hill so from that we infer that there must be fire there. So, is the fire there proved with inference, is able to remove darkness or cold here? No!. This is a very good example. So, any Ishwara proved with the power of inference, that is not real Ishwara but only flights of fancy!
Naiyayikas (Scientists) and Vaishashikas (Buddhists, only believe in realisation) too have considered the form of Ishwar but that is not real Ishwar. Their Ishwara is not existence but exist because of the existence in general, not consciousness, but conscious because of one of the attributes of the consciousness called Gyan, not blissfulness either.
Similarly, the Ishwara which can create the cosmos but cannot become the cosmos, i.e. can be a maker but not the matter, for that, I will ask a rhetorical question.
Another small thing which everybody can understand that any knowledgeable, desire-driven, active and conscious person creates the instrument microphone through metal and plastic, he will have the ability to make the microphone but not himself becoming the microphone. And the matter, i.e. plastic and metal which went into making of this microphone, had the ability to become a microphone but not to be the maker of that microphone.
Any mechanic, no matter how good he is, can we say that he has full control over the instrument that he has made? No. And if he does not have full control over that, how come he is Ishwara. That’s why the Ishwara accepted in Vedas is true.
We have the criteria to judge the Ishwara and one who is maker as well as matter that only has all the traits of Ishwara. That’s why they have makeshift Ishwaras and in truth, the traits of Ishwara are present in Vedas only. And the Dharma approved by the Vedas only qualifies to be Dharma
According to Sut-samhita, what we have told about this mechanic thing, according to our Guruji Swami Karpatri ji Maharaj, his commentary on Ishavasya Upanishad,
Those whose Ishwara can create the cosmos but can’t become the cosmos, their Ishwara, can’t have full control over the cosmos and when he has no control over the cosmos, so it means, it has no traits of Ishwara. In reality, their Ishwara can not even make the Universe.
One more thing, those whose Ishwara can create the cosmos and can become the cosmos, their Ishwara only can take incarnation. Whose Ishwara can create the cosmos but can’t become the cosmos, it cannot take incarnation.
For example, the Ishwara of Vaishashiks, Nyayikas and of Seshwar Sakhyavadi Yogis can’t take incarnation.
Let me give an example, there is this word ‘Aabhas’ (impression).
Chitabhas mean - that which looks like conscious like Chit but not has the traits of consciousness,
DharmAbhas would be – which seems like Dharma but has no traits of dharma,
IshwarAbhas would be – which seems like Ishwara but has no traits of Ishwara.
At other places, it is DharmAbhas and IshwarAbhas, so there is only one Dharma and Ishwara. The dharma which is described in Veda only is dharma.
Any of its stream, went here and there, that is not Dharma. They are right up to that extent which is acceptable to the root of Dharma.