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Ātman (IAST: ātman, Sanskrit: आत्मन्) is a Sanskrit word that means 'self'. In Hindu philosophy, especially in the Vedanta school of Hinduism, Ātman is the first principle, the true self of an individual beyond identification with phenomena, the essence of an individual. In order to attain salvation (liberation), a human being must acquire self-knowledge (atma jnana), which is to realize that one's true self (Ātman) is identical with the transcendent self Brahman:
If atman is brahman in a pot (the body), then one need merely break the pot to fully realize the primordial unity of the individual soul with the plentitude of Being that was the Absolute.
Development of the concept 
The earliest use of word "Ātman" in Indian texts is found in the Rig Veda (RV X. 97. 11). Yāska, commenting on this Rigvedic verse, accepts the following meanings of Ātman: the pervading principle, the organism in which other elements are united and the ultimate sentient principle. Yajnavalkya (c. 9th century BCE), in the Brihadaranyaka Upanishad, uses the word to indicate that in which everything exists, which is of the highest value, which permeates everything, which is the essence of all, bliss and beyond description. While, older Upanishads such as the Brihadaranyaka, mention several times that the Self is described as Neti neti or not this - not this, Upanishads post Buddhism, like the Maitri Upanishad, define Ātman as only the defiled individual self, rather than the universal self.
Taittiriya Upanishad defines Ātman or the Self as consisting of five sheaths (kosha): the bodily self consisting the essence of food (annamaya kosha), the vital breath (pranamaya kosha), the mind or will (manomaya kosha), the intellect or capacity to know (vijnanamaya kosha) and bliss (anandamaya kosha). Later Advaitic text Pañcadaśī classifies the degrees of Ātman under three headings: Gauna or secondary (anything other than the personality that an individual identifies with), Mithya or false (bodily personality) and Mukhya or primary (the real Self).
Schools of thought 
Philosophical schools such as Advaita (non-dualism) see the "spirit" within each living entity as being fully identical with Brahman – the Principle, whereas other schools such as Dvaita (dualism) differentiate between the individual atma in living beings, and the Supreme atma (Paramatma) as being at least partially separate beings. Thus atman refers to the individual spirit or the observer being.
Within Advaita Vedanta philosophy the Atman is the universal life-principle, the animator of all organisms. This view is of a sort of panentheism (not pantheism) and thus is sometimes not equated with the single creator God of monotheism. Identification of individual living beings/souls, or jiva-atmas, with the 'One Atman' is the non-dualistic Advaita Vedanta position, which is critiqued by dualistic/theistic Dvaita Vedanta. Dvaita Vedanta calls the all-pervading aspect of Brahman Paramatman different from individual Atman and claims reality for both a God functioning as the ultimate metaphorical "spirit" of the universe, and for actual individual "spirits" as such. The Dvaita, dualist schools, therefore, in contrast to Advaita, advocate an exclusive monotheistic position wherein Brahman is made synonymous with Vishnu. Aspects of both philosophies are found within the schools of Vishishtadvaita Vedanta and Achintya Bheda Abheda.
In some instances both Advaita and Dvaita schools may accommodate the others' belief as a distinct form of worship or practice towards the same ultimate goal.
Samkhya and Yoga 
Unlike Advaita Vedanta, in Samkhya Sutra, Kapila holds blissfullness of Ātman as merely figurative. However, both Samkhya and Advaita consider the ego (asmita, ahamkara) rather than the Ātman to be the cause of pleasure and pain.
The Yoga of Patañjali, as described in the Sutras of Patanjali, departs from the monism of Advaita. The highest attainment, according to Yoga, does not reveal the experienced diversity of the world to be an illusion. Furthermore, self discovered in the Supreme experience is not a single universal Ātman. It only is one of the many individual selves discovering itself.
Removing the "walls that contain human consciousness" to create a “union” of the individual self (jivatman) with the supreme self (paramatman), is now commonly held to be the goal of yoga practice. The body is the mediating vehicle between the individual, human world (microcosm) and absolute, cosmic reality (macrocosm). This monistic vision posits a unity between the individual and the world—i.e., between microcosm and macrocosm. The philosophy, known as Vedanta (lit. “The end of the Vedas"), transformed the Vedic worldview to the monistic. This led to the development of tantric metaphysics and gave rise to new forms of yoga, such as jnana yoga, bhakti yoga, and new methods such as Kundalini and Hatha yoga.
Adherents to Jainism and Brahma Kumaris movement also use the phrase the atman to refer to 'the self'. Often atman is mistaken as being interchangeable with the word jiva with the difference being somewhat subtle. Whereas atman refers to the self, jiva refers to the living being, the exact comprehension of which varies throughout the philosophical schools.
See also 
- Deussen, Paul and Geden, A. S. The Philosophy of the Upanishads. Cosimo Classics (June 1, 2010). P. 86. ISBN 1616402407.
- David Gordon White, (1996). The Alchemical Body: Siddha Traditions in Medieval India. Chicago: University of Chicago Press; 18. Quoted online in InfoRefuge "Patanjali’s Yoga Darsana – The Hatha Yoga Tradition." NOTE: Similar identification also made in the Hathayogapradipika (4.50)
- Baumer, Bettina and Vatsyayan, Kapila. Kalatattvakosa Vol. 1: Pervasive Terms Vyapti (Indira Gandhi National Centre for the Arts). Motilal Banarsidass; Revised edition (March 1, 2001). P. 42. ISBN 8120805844.
- Raju, Poolla Tirupati. Structural Depths of Indian Thought. SUNY Series in Philosophy. P. 26. ISBN 0-88706-139-7.
- Swami Prabhavananda, The Upanishads: Breath of the Eternal, http://www.atmajyoti.org/up_brihadaranyaka_upanishad_text.asp
- Peter Harvey, The Selfless Mind. Curzon Press, 1995, page 34.
- DasGupta, Surendranath. A History of Indian Philosophy, Volume 1. Cambridge University Press. P. 46. ISBN 9780521116299.
- Krishnananda, (Swami). The Philosophy of the Panchadasi. The Divine Life Society. Rishikesh. P. 166-169.
- Bhagavata Purana 3.28.41
- Bhagavata Purana 7.7.19–20 ""Atma" also refers to the Supreme Lord or the living entities. Both of them are spiritual."
- Bhagavad Gita 12.3–4 "But those who fully worship the unmanifested, that which lies beyond the perception of the senses, the all-pervading, inconceivable, unchanging, fixed and immovable – the impersonal conception of the Absolute Truth – by controlling the various senses and being equally disposed to everyone, such persons, engaged in the welfare of all, at last achieve Me."
- Paranjpe, A. C. Self and Identity in Modern Psychology and Indian Thought. Springer; 1 edition (September 30, 1998). P. 263-264. ISBN 978-0-306-45844-6.
- Cowell & Gough, p. 271
- Stephen H. Phillips, Classical Indian Metaphysics: Refutations of Realism and the Emergence of "new Logic". Open Court Publishing, 1995, pages 12–13.
- "Patanjali’s Yoga Darsana – The Hatha Yoga Tradition," InfoRefuge.
- Learning materials related to Buddha oracle#7 The Way of Victory (The soul (atman and anatta)) at Wikiversity