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I am confused about the life cycle in Hinduism.

What is the starting point of a soul?

Yes, a soul exchanges bodies, but when does a soul take birth and how will fate be written to it (as it has no karma [no previous life actions recorded]). After the death of a body, the soul has three choices. One is heaven (if he/she did good), one is hell (if he/she did bad, he/she will be punished and given a second chance), and the last one is moksha (he had seven chances at life, and within these seven chances he has to do good and if he does he will go to heaven; if he does very well he will get moksha!; but if he doesn't, what happens?). Is this right?

Can someone explain the life of a soul (atma) in Hinduism?

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The life cycle of a soul is very simple. In course of time it emerges from God, takes up material bodies and revolves in samsara and back into God goes it again.

yathā sudīptāt pāvakādvisphuliṅgāḥ sahasraśaḥ prabhavante sarūpāḥ
tathā'kṣarādvividhāḥ somya bhāvāḥ prajāyante tatra caivāpi yanti
[Mundak Up. 2.1.1]

Meaning
Just like from a well blazing fire shoots forth thousands of sparks, so from God arise beings of different kinds and goes back to it again.

This is the general life cycle of a soul starting from the inception of creation to its desolation, unless of course the jiva attains moksha or mukti before the desolation of the universe. So either way or the other, a soul comes from God and goes back into God eventually. But if it has not attained mukti or cleared all of its Karma, then it will have to comeback again when creation takes place the next time:

sarva-bhūtāni kaunteya prakṛtiṁ yānti māmikām
kalpa-kṣaye punas tāni kalpādau visṛjāmy aham
[BG - 9.7]

Meaning
O son of Kuntī, at the end of the kalpa, all the beings and material nature (prakruti) enter into Me, and at the beginning of another kalpa, by My potency, I create them again.

So one thing to not here is that, jiva being part or energy of God, is also eternal like God:

mamaivāṁśo jīva-loke jīva-bhūtaḥ sanātanaḥ [BG - 15.7]
-The living entities in this conditioned world are My eternal fragmental parts.

So even when there was nothing, the jiva was existent along with God in a suspended condition. It is only when the material creation takes place that it gains a material body as per its previous actions and till the existence lasts it revolves between heaven, hell, earth and many other realms unless it attains moksha, the permanent liberation. After getting liberation it doesn't automatically falls down to material mode of existence, but can come down to earth to do devotion of God as per its own will. Please see this answer for more information regarding moksha.

What happens if the jiva doesn't do very well?
One thing to correct here is that, the jiva doesn't get moksha only because he does very well or he does good works. The concept of moksha or salvation is different in Hinduism from other religions. Works of any kind, good or bad can only award heaven, hell or this mortal world, they can't award moksha:

puṇyena puṇyaṃ lokaṃ nayati pāpena pāpamubhābhyāmeva manuṣyalokam [Prsn Up - 3.7]

Meaning
By doing good works (punya) one gets heaven, by doing sinful works (papa) one gets hell and by doing a mixture of both kinds of work one gets earth.

Only when one clears out all its karma by following the path of karma yoga, bhakti yoga or jnana yoga that one gets liberation. Otherwise irrespective of what a jiva does, he still remains in bondage.So if a jiva doesn't do very well, he will get birth again as per his actions and will continue its existence in samsara.

  • what is Prsn Up? Prasna Upanishad? I can't find the verse you reference in Prasna. – Swami Vishwananda Oct 31 '14 at 10:39
  • @SwamiVishwananda sorry swamiji i did a mistake while reading the verse, you can find it at 3.7 instead of 2.7. I'll update it, thanks. – Be Happy Oct 31 '14 at 12:17
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    Ok. I see now. I really do not like the translation as hell, as this has from the Western religions the connotation of eternal damnation and fire. I think a better translation is sinful world, nether world, or world of sub-human beings. – Swami Vishwananda Nov 1 '14 at 4:04
  • You said "a soul comes from God and goes back into God eventually. But if it has not attained mukti or cleared all of its Karma, then it will have to comeback again when creation takes place the next time" :So if we (soul) came out from God & we have to go inside the god again then y did we came out in the first place ???& if we comes from god then we should be divine (Mukt aatma) by default coz we living inside the god then we shouldn't be put under test of getting mukti & all – user2755 Apr 7 '15 at 13:11
  • Goes back to avyakt/Maya/unmanifested where your karmas are still preserved. And when creations take place from avyakt, jiva takes the body with to continue in samsara. Maya is itself Isvara, which is eternal and always in change. – Love Sharma Sep 20 '18 at 7:37
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First of all, there is no starting point for the soul; here's what Krishna tells Arjuna in the Bhagavad Gita:

Never was there a time when I did not exist, nor you, nor all these kings; nor in the future shall any of us cease to be.... For the soul there is neither birth nor death at any time. He has not come into being, does not come into being, and will not come into being. He is unborn, eternal, ever-existing and primeval.

Now as to your claim that we only have seven births to get Moksha, that's not true, it can take as many births as necessary. That's why Krishna tells Arjuna in the Bhagavad Gita "Many, many births both you and I have passed." And similarly he says this later on in the Bhagavad Gita:

And when the yogī engages himself with sincere endeavor in making further progress, being washed of all contaminations, then ultimately, achieving perfection after many, many births of practice, he attains the supreme goal.

In any case, other than the seven chances part your description is largely accurate. As I discuss in this answer, the Garuda Paruna describes in great detail what happens in the afterlife:

These followers of [Yama] the King of Justice know accurately all the virtues and vices of mankind, and the karma born of mind, speech and body. To the man who pleases them by austerity, charity and truthful speech, they become benevolent, granting heaven and liberation. Knowing the wicked actions of the sinful, those truth-speakers, relating them before the King of Justice, become dispensers of misery.... Then the cruel messengers, having beaten them, say, "Go along, you sinner, to the very dreadful terrifying hells."

So as you can see, some people who do good deeds go to Devaloka, other people who do good deeds get Moksha, and people who do bad deeds go to Asuraloka.

And of course going to Devaloka and Asuraloka isn't where the process ends; concerning good people the Garuda Purana says "The righteous man having enjoyed heaven, is born in a stainless family." And concerning bad people it says "Those who are very sinful, having passed through dreadful hells produced by their great sins, are born here upon the exhaustion of their karma."

EDIT: You also asked "Yes, a soul exchanges bodies, but when does a soul take birth and how will fate be written to it (as it has no karma [no previous life actions recorded])." Adi Shankaracharya, in his commentary on the Brahma Sutras, says this isn't problematic because the actions of the soul go infinitely far back:

[F]or although the activity of the soul is not independent, yet the soul does act. The Lord indeed causes it to act, but it acts itself. Moreover, the Lord in causing it to act now has regard to its former efforts, and he caused it to act in a former existence, having regard to its efforts previous to that existence; a regressus against which, considering the eternity of the samsâra, no objections can be raised.

  • Thanks for edit.!Can you elaborate that EDIT line please.It was bit confusing to me. Thanks.! @Keshav Srinivasan. – Avis Nov 13 '14 at 7:45
  • @Shankar The idea is this: if the soul had a starting point, then you could ask, what determines the experiences the soul will have in its first birth. But if the soul has no starting point, and it has taken infinitely many births in the past, then it never had a first birth. So its current birth is based on its actions in its previous birth, and its previous birth is determined by its actions two births ago, etc. Thus there's no issue what "initially" determines its birth. – Keshav Srinivasan Nov 13 '14 at 8:55
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    Though I upvoted this answer, I felt that this statement is not according to Gita: "...other people who do good deeds get Moksha,...". According to Gita, the Moksha is not about doing good and also not about Not doing bad. Rather it's about detaching oneself from the "perception" of doing anything, even while doing. The very perception of "I have done XYZ" results in ego, which can attach the soul into the material life. This is my understanding. I think @BeHappy has also pointed the similar thing in its answer. – iammilind Jul 17 '15 at 7:06
  • @iammilind Well, there are multiple paths to Moksha. There is Karma Yoga, Jnana Yoga, Bhakti Yoga, and Saranagati. Saranagati, also known as Prapatti, just requires a single act of surrender. It doesn't require realization, devotion, detachment, or anything else. This path is described in the Charama Shloka of the Bhagavad Gita, as I discuss here: hinduism.stackexchange.com/a/6857/36 – Keshav Srinivasan Jul 17 '15 at 7:43
  • Isn't "Saranagati" ultimately "Bhakti Yoga" only? Even if it's different, it support the notion of "good deeds get Moksha". – iammilind Jul 17 '15 at 8:15
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I can only try to point you towards Śrīmad-Bhagavad-gītā where the Lord Himself answers.

Bg 2.20 Translation

For the soul there is never birth nor death. Nor, having once been, does he ever cease to be. He is unborn, eternal, ever-existing, undying and primeval. He is not slain when the body is slain.

Purport

Qualitatively, the small atomic fragmental part of the Supreme Spirit is one with the Supreme. He undergoes no changes like the body. Sometimes the soul is called the steady, or kūṭastha. The body is subject to six kinds of transformations. It takes its birth in the womb of the mother's body, remains for some time, grows, produces some effects, gradually dwindles, and at last vanishes into oblivion. The soul, however, does not go through such changes. The soul is not born, but, because he takes on a material body, the body takes its birth. The soul does not take birth there, and the soul does not die. Anything which has birth also has death. And because the soul has no birth, he therefore has no past, present or future. He is eternal, ever-existing, and primeval—that is, there is no trace in history of his coming into being. Under the impression of the body, we seek the history of birth, etc., of the soul. The soul does not at any time become old, as the body does. The so-called old man, therefore, feels himself to be in the same spirit as in his childhood or youth. The changes of the body do not affect the soul. The soul does not deteriorate like a tree, nor anything material. The soul has no by-product either. The by-products of the body, namely children, are also different individual souls; and, owing to the body, they appear as children of a particular man. The body develops because of the soul's presence, but the soul has neither offshoots nor change. Therefore, the soul is free from the six changes of the body.

In the Kaṭha Upaniṣad also we find a similar passage which reads:

na jāyate mriyate vā vipaścin
nāyaṁ kutaścin na vibhūva kaścit
ajo nityaḥ śāśvato 'yaṁ purāṇo
na hanyate hanyamāne śarīre.
(Kaṭha 1.2.18)

The meaning and purport of this verse is the same as in the Bhagavad-gītā, but here in this verse there is one special word, vipaścit, which means learned or with knowledge.

The soul is full of knowledge, or full always with consciousness. Therefore, consciousness is the symptom of the soul. Even if one does not find the soul within the heart, where he is situated, one can still understand the presence of the soul simply by the presence of consciousness. Sometimes we do not find the sun in the sky owing to clouds, or for some other reason, but the light of the sun is always there, and we are convinced that it is therefore daytime. As soon as there is a little light in the sky early in the morning, we can understand that the sun is in the sky. Similarly, since there is some consciousness in all bodies—whether man or animal—we can understand the presence of the soul. This consciousness of the soul is, however, different from the consciousness of the Supreme because the supreme consciousness is all-knowledge—past, present and future. The consciousness of the individual soul is prone to be forgetful. When he is forgetful of his real nature, he obtains education and enlightenment from the superior lessons of Kṛṣṇa. But Kṛṣṇa is not like the forgetful soul. If so, Kṛṣṇa's teachings of Bhagavad-gītā would be useless.

There are two kinds of souls—namely the minute particle soul (aṇu-ātmā) and the Supersoul (the vibhu-ātmā). This is also confirmed in the Kaṭha Upaniṣad in this way:

aṇor aṇīyān mahato mahīyān
ātmāsya jantor nihito guhāyām
tam akratuḥ paśyati vīta-śoko
dhātuḥ prasādān mahimānam ātmanaḥ
(Kaṭha 1.2.20)

"Both the Supersoul [Paramātmā] and the atomic soul [jīvātmā] are situated on the same tree of the body within the same heart of the living being, and only one who has become free from all material desires as well as lamentations can, by the grace of the Supreme, understand the glories of the soul." Kṛṣṇa is the fountainhead of the Supersoul also, as it will be disclosed in the following chapters, and Arjuna is the atomic soul, forgetful of his real nature; therefore he requires to be enlightened by Kṛṣṇa, or by His bona fide representative (the spiritual master).

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    You shouldn't copy the whole purport, you should just give the translation of the verse. – Keshav Srinivasan Oct 30 '14 at 1:32
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    And also your answer shouldn't just be a pure copy-paste. It's fine (and encouraged) to quote scripture in your answer, but you should also give the answer in your own words. – Keshav Srinivasan Oct 30 '14 at 2:51

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