Can we create folders in Gmail the same way as it happens in Yahoo!?
Gmail provides the "label" feature but Yahoo! folders easily separates the messages as categorized.
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Sorry, but you are looking for a feature that simply does not exist in gmail. You will not be able to change that behavior unless you download your e-mail to a local client like Outlook and use it to sort your mail.
Actually, you can use labels quite like folders if you prefer.
For instance, you can drag and drop your emails to labels.
Read more of "Labels: drag and drop, hiding, and more" at the Official Gmail Blog.