Question

why and how do we periodise time in history

Answer 1

The Indian History is divided into three parts- Ancient, Medieval and Mordern.
The Ancient History of India includes everything from the historic hunter-gatherers and Palaeolithic cultures- to the Post Mauryan empire. This period talks about the stone industries, new developments in technology, food production, subsistence farming etc. A glimpse of the planning and structure of the Harappan Civilization is also included in the study of this period. It ends with the Maurayan empire with a special reference being made to Kushanas and Satavahanas. Ancient History also studies the proliferation of caste and jatis and the beginning of different kinds of traditions.
The Medieval History of India starts with the evolution of political powers like the Rajputs, Cholas, Rashtrakutas as well as the invasion of the early Turkish rulers. The presence of Muslims is seen in this period with the rule of the Delhi Sultanate.
The mighty Mughals are another product of this period.
Medieval India saw the rise of Mughals, fall of regional powers and the rule of the invaders in the land of Indian.
Modern India starts with circa 1750 till 1947, the year India got independence.

Answer 2

James Mill divided the Indian history into three periods: Hindu, Muslim and British.

According to  Mill, Only British rules, culture and laws could make indians civilised.

There are significant sources to study the periods of events and by studing different historical evidences a string of time periods can be formed.