Karma is the concept that the individual's actions determine his fate, whether in this or in a future life, and that every action has to be balanced in some way. By doing certain actions, certain energies are set in motion, which bring certain effects. It is a way to restore balance in the Universe, and is not punishment for one's actins.
Reincarnation is the rebirth of the soul in a new body, while Karma affects the new body and determines the circumstances into which it is born. Both of them can explain a lot of things in each one's life. A life of comfort and success means that the person performed good deeds in a previous life, and a life of difficulties, failure and adversities is a retribution for negative past actions.
According to Eastern philosophies there are three kinds of karma. The first is the karma that one is going through now, in this life, and which is payment for past deeds. The second kind is that which is waiting in store, and will manifest in a future life. The third is that which a person is creating right now, with his present actions.
The question is, do you, the real you, reincarnate and is affected by karma?
Who are you? Are you your thoughts and feelings, and do they reincarnate? Thoughts and feelings are passing visitors. One moment certain thoughts and feelings pass through your mind, and the next moment you are aware of other thoughts and feelings. This means that you are neither of them, and are only their host for a little while.
It is said that it is the soul that reincarnates, but what is the soul? This is an ambiguous term. If someone says, "my soul reincarnates" or "my soul is eternal", he is actually saying that there are two different entities. There is he, and there is his soul, which means that he is not the soul. Forgive me for the comparison, but it is like saying, "I have a pair of shoes", "I have a car" and "I have a soul". It is regarded as a possession. This means that it is possible to be "with a soul" and "without a soul". Does this sound reasonable to you?
If a soul is a "possession", then who is the owner? This owner must be more important then the soul!
I would like to introduce you to a perspective that comes from the Eastern nonduality tradition. It says that there is just one kind of energy, power or spirit filling the whole Universe. This power "playfully" expresses itself through myriads of forms, which it has "created" from itself. Each form erroneously considers itself as a separate entity, and passes through various experiences. It is one and indivisible power seeing the world through the eyes of the many forms it has created.
Each entity feels that it is living a unique life with past present and future, and has its own mind and feelings. If we accept the nonduality philosophy, we have to accept that there is just One Spirit, not many, and that this Spirit never actually reincarnates, and the karma it undergoes is illusory. Then who is it that goes through karma and reincarnation?
The practical conclusion is that though people encounter different situations and live in different circumstances, deep within all are indivisible part of the same One Spirit. This Spirit is not touched or affected by situations or circumstances. It means that from the viewpoint of the Spirit, karma and reincarnation are illusory. When one is able to realize this understanding on a deep level, one goes beyond karma and reincarnation.
When the Consciousness of the Spirit is "awakened", through concentration and meditation, one realizes that he is an integral part of the eternal and undivided Spirit. He experiences a Spiritual Awakening, and then both reincarnation and karma lose their meaning, power and reality.