"पीटर किताब पढ़ता है।"
Translation:Peter reads the book.
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Generally, such a sentence would have fewer chances of being used naturally. If one wishes to say "Peter reads a book", we'd say पीटर एक किताब पढ़ता है whereas if the book has been mentioned before we'd say something like पीटर वह किताब पढ़ता है (Peter reads that book) to emphasise that particular book which has been talked about before.
This one is just a grammatically correct sentence that can have both of the accepted translations.
1515
In another comment, someone explained that the present continuous does exist in Hindi and gave examples. That answers the first part of your question but unfortunately, I can't find that comment, so that I can't help you understand how it is built.
In case anyone else comes to this page, as hptroll has earlier indicated, "Peter reads book" should NOT be accepted because although it may translate the concepts indicated in the Hindi sentence, it is not acceptable English. In English, we almost always need some kind of specifier with singular nouns (a book, this book, that book, the book). Only in rare cases such as abstract nouns or proper names is it ok not to have a specifier ("I fall in love" is therefore OK, but "I fall in hole" is not; it must be "I fall in a hole" or "I fall in the hole"). And since the Hindi किताब is definitely singular, we must insert either "a" or "the" to make a correct English sentence.
1515
Yes. It’s an auxiliary. In English, you don’t need an auxiliary in the simple present (you do in the continuous present) but in Hindi, you do.