Living in a Hindu country i keep on hearing phrases like Allah\God is everywhere , Allah is in your hearts, Every heart has Allah etc. I understand that they may not literally mean by saying Allah is in your heart , If that is the case what do they mean by saying this and What does the Quran and Sunnah say regarding this matter?
Where is Allah?
This is a very fundamental issue of the belief of the muslim and like other beliefs we should see what Qur'an and Sunnah says about it and not take the views of people who do "logical babble". After all, logic is not where we take our religion from, but the revelation. I am not going to talk from myself (with my logic) here but just mention Surah and Hadith and after that, sayings of Scholars (few). But, Inshaa Allah, the Qur'an and Hadith should be enough to conclude what is the right belief and what is wrong and kufr.
So, here are the evidences and we can make a conclusion:
Allah is above His Throne
Proofs from Qur'an
Allah says in Surah Taha :
There are six other places in Qur'an where Allah has mentioned the He is over His Throne:
Please go through these Suwar and if you need, their translations (Muhsin Khan). Allah repeatedly mentions in these that He is over His Throne.
Proofs from Hadith
Now, in Qur'an Allah uses "Istawaa" and certain sects have misinterpreted it to prove Allah is everywhere. However, such interpretation is unacceptable in arabic language. What did the Imams of the past regarding such interpretation?
Allah is above
Allah is above the heaven
I hope by all these plain proofs from Qur'an and Sunnah is enough to prove that Allah is above the Heaven, Above the throne. and People should realize that when they deny Allah is above the Heavens or Above the throne, they are denying ayats from the Qur'an.
You can read more proofs here which I used as a reference for this answer.
Regarding Ma`iyyah of Allah
It is often (wrongly) used to misinterpret "Allah is everywhere".
Similarly, Surat Al-Mujadila.
But, this only means the encompassment of all the creation, the believer and disbeliever, the righteous and wicked, with His Knowledge, He Sees what they do, and Hears what they says. Nothing escapes Allah's knowledge.
Also, refer to this useful website : http://www.abovethethrone.com
My understanding and belief is that Allah is not confined in space (even if that space is infinite). What I believe is that Allah can instantaneously access (and control) every point in the Universe unconstrained by the laws of physics. But I don't know anything about how He looks like or how He exists relative to our Universe.
Even a simple concept like "space", implied by asking "where" Allah exists is something that we, humans (religious and atheists), do not understand quite well. For example, some hotly investigated physical theories (e.g., string theory) that have no roots in religions claim that space itself is 10-dimensional and that we might be confined to live on a 3-dimensional membrane in that hyperspace (called Bulk). I just use that information (although it has never been confirmed by experiment) to understand things like the Quranic verse that says "Satans see you from where you can not see them" (possibly they are living in the bulk unconstrained to a 3-d membrane). But this again tells me nothing about how Allah exists relative to the Universe.
When it comes to Allah, I just believe He exists (based on my own purely logical arguments) and that His nature transcends ours (again based on those same arguments) and He is beyond our senses.
I ask Allah to grant us the bounty of seeing (or perceiving) Him in the hereafter.
ليس كمثله شئ