Acharya Prashant explains that the common perception of the soul as something residing within the body is a fundamental misunderstanding. He uses the analogy of the sky reflected in a pot of water; the pot mistakenly believes the sky is inside it, just as humans mistakenly believe the soul is contained within their physical form. He clarifies that the soul is universal and impersonal, and the phrase 'my soul' is a contradiction because the soul cannot be possessed or localized. This error, he suggests, stems from the human tendency to objectify everything, turning the formless truth into a material object situated within time and space.