Inhabitant of 'Sahasrara' (Crown Chakra), undivided and absolute still Prana referred as 'Paramatma' (God), when comes down to 'Agna Chakra' or the Third Eye Chakra, a coating of ignorance is manifested in Him. As a result of getting into vibrating pulse, He re-generates Himself into 'Maya' or 'Prana'. After the Prana becomes restless, the Atma (Soul) intermingled with Prana descends to material consciousness. There are four types of Atma - Bhutatma, Sutratma, Jivatma and Paramatma.
After the descent, the restless Prana creates a vast universe by getting into a mind and then a body. Due to the illusion a bound creature think it's body as Atma or soul, because any life first feels the presence of Atma in it's body made of 'Pancha Bhuta' (Five worldly elements - earth, water, fire, air, space). The state of Atma developed after getting intermingled with body is known as 'Bhutatma'
Knowledgeable human can understand after long process of observation, that this perishable, always changing elementary body can never be 'Atma'. To their knowledge there is something more inside this body and behind the scene which keeps the body shiny and conscious. Whose absence make the body glamour-less dead and there remains no consciousness. Later after long 'Sadhana' they are able to find that there is transmission of consciousness due to an ongoing pulse known as pulse of Prana. Though it's of course the pulse of Prana, but it cannot be accepted as the primary element by which a body is alive. That primary element is known as 'Sutratma'. The pulse is the power of that 'Sutratma'. A 'Jiva' (creature) creates its material body by the help of this pulse of Prana, accumulating the atoms in its body as per the necessity of its 'Bhoga' (the sufferings and pleasure the body need to enjoy). Then the Prana divides itself and starts flowing through the 'Nardi' (arteries) which makes the body conscious and suitable to do Karma. A beautiful and pleasant Power remains flowing through the flow of Prana, making the body tightly organized. Hence it can be understandable that the creation of the body wouldn't have been possible without Prana. Though the powers flowing through all the arteries (Nardi) are the power of Prana, but they are not the primary one. The power which resides inside these Nardis is the cell of Prana. The one who resides in the cell of Prana and control the whole functioning of the senses in the body is known as 'Kuthasta ' or 'Jivatma'. The Kuthasta aur Jivatma though exists inside body but elapsed from / gone past the body (i.e. he is the past tense of the body). As because He is involved in the body and Prana, creature thinks that he is bound with body, finite, multiple and enjoys all fruits of Karma. But in reality He does not enjoy any fruits of Karma or happiness or sorrows. One, only comes out of the illusion after achieving self-consciousness. Butter exists in milk, but it has no connection with the watery part of the milk. We can't find any butter inside a milk unless it's churned and it floats up. This body, like the milk, when churned by Pranayam Sadhana, Soul starts floating. Then only it can be understood that Soul is not attached to Prakriti / materialistic world. When a Sadhaka reaches the state to perceive this fact, he frees himself up from this 'Bhut Prakriti' (materialistic world). At that stage all the multiple instance of Atma merges to one - 'Paramatma'. He is behind all living beings bodily senses, being undefined, inert, neutral, supreme being, Parameshwar. When this undefined inert supreme being becomes defined, just to play in this world like stage then He is called 'Ishvara' or God.