Hinduism does not believe in eternal damnation of the soul. Sri Chandrasekharendra Saraswathi Maha Swamigal (20 May 1894 – 8 January 1994), the 68th pontiff of Kanchi Mutt (Kanchi Kamakoti Peetham), explains this important aspect of Hindu religion.
Our religion has a number of unique or distinctive features. One of them is what is called the theory of karma, though this theory is common to religions like Buddhism which are offshoots of Hinduism.
What is the karma doctrine? For every action there is an equal and opposite reaction. There is an ineluctable law of physics governing cause and effect, action and reaction. This law pertaining to physical phenomena our forefathers applied to human life. The cosmos includes not only sentient beings endowed with consciousness but also countless insentient objects. Together they constitute worldly life. The laws, the dharma, proper to the first order must apply to the second also. According to the karma theory, every action of a man has an effect corresponding to it. Based on this belief our religion declares that, if a man commits a sin, he shall pay the penalty for it. Also if his act is a virtuous one, he shall reap the benefits thereof.
Our religion further asserts that one is born again and again so as to experience the consequences of one's good and bad action. "Do good.” "Do not do evil,” such are the exhortations of all religions. But Hinduism (and its offshoots) alone lay stress on the cause and effect connection. No religion originating in countries outside India subscribes to the cause and effect connection, nor to the reincarnation theory as one of its articles of faith. Indeed religions originating abroad hold beliefs contrary to this theory and strongly oppose the view that man is born again and again in order to exhaust his karma. They believe that a man has only one birth, that when his soul departs on his death it dwells somewhere awaiting the Day of Judgment. On this day God makes an assessment of his good and bad actions and, on the basis of it, rewards him with eternal paradise or sentences him to eternal damnation.