The early Indians did not believe in reincarnation. Souls went to a world of bliss shared with the Gods if they were good, and to punishment in Hell if they were evil. This was a fusion of Aryan, non-Aryan and Sumerian influences.
The Aryans, a nomadic tribal group from Europe, invaded northern India between 1700 and 1200 BCE. Their religion was based on sky worship, which included Gods similar to Greek and Roman deities. Around 3500 BCE, the Sumerians settled in Babylonia and initiated a cultural revolution which formed the blueprint for social structure through to modern times. Each settlement had its own individual deity. In time, this created a large pantheon of Gods with complex interrelationships. Hinduism, which grew out of all this, introduced a hierarchy of Gods, who were in turn facets of a unitary principle, a force that is said to exist throughout nature and in all men. Here, God is believed to be in every living thing. The Indian religions are the only ones which postulate that after death the soul loses its individuality and merges with a greater being.
Hinduism has no founder, but it does have a body of texts known as the Veda (a word meaning "wisdom" or "knowledge"). The Veda set down the belief in rebirth and transmigration, the idea that souls may be reborn in the body of other animals. The reason for rebirth is one facet of the law of Karma -- that a soul must keep returning to mortal existence until it has learned all the lessons of spiritual evolution.
All space is located within the Cosmic Egg, which contains the seven heavens and the seven netherworlds. Between these two regions lies the earth. In addition, there are as many as 8,4000,000 hells, located in a lower realm.
The individual soul can never die but must constantly be reborn. A human soul evolves gradually from lower forms, starting with minerals and vegetables, then progressing upward through lower animals and then higher animals before attaining the human state. This state, highest of all, is the only one that allows escape from the everlasting round of births and deaths. When the soul can eliminate desire and become aware of the unity of the self with Brahman, rebirth will cease. This is not the end of being, but perfect bliss. All will attain it in time.
When a person dies, the soul goes to the land of the dead, ruled over by Yama, the first of mortals to die and enter that other world. Yama is green in color, wears red robes, and has a flower in his hair. He rides a buffalo and carries a lasso. Yama does not judge; he is merely an executor who assigns the region in the hells or heaves where the soul is to stay for varying lengths of time and where the fruits of its past actions (karma) will determine its state or situation. It is karma itself which constitutes an unceasing judgment within each person.
The soul assigned to a heaven may reap the rewards of its good actions, but many sages, given a choice, refuse to enter heavens because they are mere way stations on the path to the Infinite. Eventually the soul will return to the earthly plane to resume its spiritual labors.
If the soul needs to be punished for evil actions (such as neglect of family obligations, lack of respect for teachers, and incorrect bodily habits, as well as murder, theft, lying, etc.), it may be assigned to one of the various hells. Punishments may include being boiled in oil, pecked at by birds, encircled by snakes, and worse. After the required time in hell, the soul returns to earth in a lowlier status than before. If the crimes were serious, it is sent back to be reincarnated as a worm, insect, cockroach, rat, or bird. If it has committed a crime causing defilement, it returns as an untouchable. If it has been a criminal of the worst sort, it must return as a plant.