svapne - in a dream; yathā - as; śiraḥ - of one's head; chedam - the cutting off; pañcatva-ādi - the condition of being composed of the five material elements, and other material conditions; ātmanaḥ - one's own; svayam - oneself; yasmāt - because; paśyati - one sees; dehasya - of the body; tataḥ - therefore; ātmā - the soul; hi - certainly; ajaḥ - unborn; amaraḥ - immortal.

In a dream one can see his own head being cut off and thus understand that his actual self is standing apart from the dream experience. Similarly, while awake one can see that his body is a product of the five material elements. Therefore it is to be understood that the actual self, the soul, is distinct from the body it observes and is unborn and immortal.