Ghost in Hinduism is referred as ‘preta’, ‘pey’, ‘pret’ or ‘pretam.’ Do Hindus believe in ghosts? It depends on the individual but it is believed that majority believe in ghosts. The concept of ghosts in Hindu religion is often associated with those people who had an unnatural death like murder, accident, etc and those dead people who were not given proper Hindu dead rituals like Shraadha or Tarpan.
In Hinduism, there is the concept of Kshooshma shareera apart from the physical body. This Kshooshma shareera is a sort of carbon copy of all the impressions of the five senses of the physical body. It is said in the Brahma Sutra that this acquired impressions is carried by the soul when it leaves the body.
What is left of these impressions on natural world, also referred as pinda shareeram, are completely destroyed through the various rituals performed to the dead in Hindu religion.
So the primary aim of Hindu death rituals is to destroy all the impressions that are left of a dead person in natural world and to release the soul. Therefore, what is popularly referred as ghost is completely destroyed by Hindu dead ceremonies.
If you carefully examine all the ghost stories, you will realize that the ghosts are associated with those people who had met with an unnatural death or whose ‘pinda shareera’ was not destroyed through the usual Hindu dead rituals. Such ‘pinda shareera’ will only get destroyed after a longtime and the natural destruction will depend on the aspirations and desires of the ‘pinda shareera.’ And such people are believed to roam the graveyards and there are references in the Puranas of Lord Shiva having an army of pretas or ghosts.
Now can a preta enter another person’s body? No. This is against the basic tenant of Santana Dharma (Hinduism) as a body can only have a single soul.
But hearing about the unnatural death of a person can make the listener sympathize with the dead person. And sympathy will become empathy and it can go to such an extent that the listener will assume the role of an agent to help the person who had met with unnatural death. This particular aspect has been widely used in Indian movies and folk stories and is often misunderstood as ghost.
All latent impression of dead person referred as ‘pinda shareera’ is destroyed by Hindu dead rituals like Shraadha and Tarpana. So the question of such souls roaming around as ghosts does not exist. Those ‘pinda shareera’ that did not receive proper burial get destroyed in due natural course.
But the greatness of Santana Dharma is that while performing rituals to dead ancestors, people knowingly or unknowingly perform rituals to all the dead. Thus it is believed that annual sharaadha ceremony performed destroys all the latent impressions of all the dead. Thus what is called ghost is properly dealt in Hindu religion and is given proper rest through rituals.