verbs

Lie means to tell a lie or lies. Lie is an intransitive verb and Lay is a transitive verb. Lay means to put or to place. These two words are not interchangeable. The past tense of lie is lay and the past participle form is lain. 

Present tense       Past tense  Past participle   Present participle

Lie                          Lay                Lain                  Lying

Lay                         Laid                Laid                 Laying   

Please don't lie to me.

I always lie down on the floor and watch TV. He lay down for a power nap.

I saw a man lying on the ground last night.

I asked John to lay(to put or to place) the books on the shelf. The books are lying on the table.

"You lie down on the sofa to watch TV and spend the entire evening lying there; you do not lay down on the sofa to watch TV and spend the entire evening laying there.

If you see something lying on the ground, it is just resting there; if you see something laying on the ground, it must be doing something else, such as laying eggs.

 Once you lay (put or place) a book on the desk, it is lying (reclining, resting) there, not laying there.

 When you go to Bermuda for your vacation, you spend your time lying (not laying) on the beach (unless, of course, you are engaged in sexual activity and are, in the vernacular, laying someone on the beach)."

http://www.grammarmudge.cityslide.com/articles/article/992333/8992.htm

Its all explained by ^^