Karma translates literally as 'action', 'work' or 'deed' and is often described as the "moral law of cause and effect". Such cause-and-effect occurs on any given plane, whether physical, mental, or otherwise. According to the Upanishads, it is said that the individual or 'actor', known as the jiva-atma, will develop samskaras (impressions) from all actions he or she performs. However, the soul itself is credited with being unchangeable, pure, and eternal, so it is the individual's "linga sharira", a body more subtle than the physical one, but less subtle than the soul, which "serves as the vehicle of mind and character" and retains impressions, carrying them over into the next life. These impressions create a unique trajectory for the individual, linked by actions in former lives and reactions in future lives.

Thus, the law of karma, which is said to be neutral and never-failing, is inexorably linked to the concept of reincarnation. It can explain one's unique circumstances of birth, such as one's personality (or aggregate of desires), family, physical characteristics, and geography. In addition, past lives intrude upon the present one by setting up inevitable windfalls or significant events in the future with vistas of infinite possibility interspersed in between. For instance, the Puranas claim that every being is born with an allotted number of breaths. How rapidly one uses up those breaths and in the engagement of what activities is more or less free, barring other primary karmas. The notion of free will and destiny/fate intertwine very tenuously in the system of karma, where the individual is always responsible for his/her own experiences during any given life-cycle, free to choose and yet bound to decision. The individual must act, must create a future for him or herself. This is central: inaction is not an option.

This system of action, reaction, birth, death, and rebirth is a continuum called samsara. One's atman must inhabit earthly forms (from lowly cell structures, fungi and plants to insects, fish, animals and, ultimately, human beings) in a continuous cycling motion forward in accordance with the system of eras, or yugas, ultimately seeking a way out or degenerating with the cosmos into negation and then emerging in a whole new cycle. This karmic continuity from one life to the next, the indispensability of the individual life to the workings of the universe, is a strong premise in much of Hindu thought and is exemplified as a primary theme in the Mahabharata. On the relationship between the physical life and causal life (the transient, earthly body and the eternal atman), the Bhagavad Gita in fact states that

As a person puts on new clothes, discarding old and torn clothes, similarly an embodied soul enters new material bodies, leaving the old bodies.

(B.G. 2:22)

If samsara were never-ending, the cycle of birth, death, and rebirth would be a guarantee of eternal suffering sweetened only occasionally by ephemeral pleasures and, if one were so fated, rare glimpses of the divine. It is for this reason that many schools of Hinduism, particularly Advaita Vedanta, do not teach that all worldly pleasures are sinful but instead caution that they can never bring deep, lasting happiness (ananda) or peace (shanti) and serve only to further embroil the individual in more and more karma. A person desires to be born because he or she wants to enjoy ephemeral pleasures, which can be enjoyed only through a perishable body. This occurs as long as the soul mistakenly identifies itself with the ego (the sense of "I" and "mine", called ahamkara in Sanskrit), which causes it to be reborn again and again.

It is thought that after several cycles of birth and rebirths, a jiva-atma will eventually come to the conclusion that recurrence is suffering, that desires are the chains of karma, and that there is no other worthy purpose but liberation (moksha). To this end, the individual can undertake spiritual practice (sadhana or sanyasa or the yogas). When the individual finally realizes his or her own divine nature - i.e., apprehends the true "self" as the immortal, limitless soul rather than the finite body or the ego — all desire for the pleasures of the world vanish, since they seem insipid compared to spiritual ananda (Supreme Bliss). It is this realization which is capable of breaking the cycle of reincarnation.

Karma is a useful lens through which to view the concept of sin in Hinduism. To understand 'sin'/ 'bad'/'evil' and 'virtue'/'good' in certain schools which do utilize equivalent terms, it helps to keep in mind that, in this case, that which is sinful is contrary to dharma, or harmony, and therefore complicates one's karma, keeping one embroiled in samsara. That which is virtuous is in accordance with dharma, thus allowing older karmas to exhaust themselves without creating new ones. But, on the other hand, some schools maintain that there is no single yardstick for the valuation of any given karma (action) as being good or bad. It is simply a matter of dissolving past karmas and restraining from creating new ones. To this end, pursuit of self-knowledge would be prescribed as the means towards escaping the wheel of life.

While many Hindus see God as directly involved in this process (particularly as an avatar, balancing dharma and karmic 'debts'), others consider the natural laws of causation self-sufficient.

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• Theory of Karma
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• Four Pursuits of Life
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