There are some good answers, but I was puzzled over one part of your question.

You write:

I don't know the difference between rat and mouse, and fox, wolf, and jackal in real life. Means that I know they are different but I can't make out who's who on seeing them.

Do you mean that you not know the difference between those animals, and would not be able to tell them apart? If this is a book your child enjoys, my advice would be to take some time to learn them apart.

a good place for you to start would be wikipedia: Fox Jackal Wolf Mouse Rat Turtle Tortoise

(note that use of turtle/tortoise actually differs a bit depending on American, British or other English usages.)

In addition you (and you child) can maybe go to a zoo and look at these animals, and I second getting a book with good clear pictures of animals, in addition to a more art and story driven book.

Then you write:

The story books have hand painted pictures of all these animals, and somewhere they call them mouse and other place they call them rat. Same is the case with fox, wolf, and jackal.

So my question is: does the book actually mix these characters up? Or are they distinct characters with similar pictures?

if the intent of the book is to mix them up, (which it could be to tell a certain type of story), the point of the story might be more suitable for older children.

if the characters are different, but you think they look the same, I would say to go with what the book says and treat them. Even if they don't look different to you, the idea that there are different animals and that they look similar is ok.

I suspect the point of this book is not to teach how the animals look, but to have a story involving some different characters. Treat the book as such, and don't worry about teaching how the animals look from a different source.

There are some good answers, but I was puzzled over one part of your question.

You write:

I don't know the difference between rat and mouse, and fox, wolf, and jackal in real life. Means that I know they are different but I can't make out who's who on seeing them.

Do you mean that you not know the difference between those animals, and would not be able to tell them apart? If this is a book your child enjoys, my advice would be to take some time to learn them apart.

a good place for you to start would be wikipedia: Fox Jackal Wolf Mouse Rat Turtle Tortoise

(note that use of turtle/tortoise actually differs a bit depending on American, British or other English usages.)

In addition you (and you child) can maybe go to a zoo and look at these animals, and I second getting a book with good clear pictures of animals, in addition to the more art and story driven book.

Then you write:

The story books have hand painted pictures of all these animals, and somewhere they call them mouse and other place they call them rat. Same is the case with fox, wolf, and jackal.

So my question is: does the book actually mix these characters up? Or are they distinct characters with similar pictures?

if the intent of the book is to mix them up, (which it could be to tell a certain type of story), the point of the story might be more suitable for older children.

if the characters are different, but you think they look the same, I would say to go with what the book says and treat them differently. Even if they don't look different to you, the idea that there are different animals and that they look similar is ok.

I suspect the point of this book is not to teach how the animals look, but to have a story involving some different characters. Treat the book as such, and worry about teaching how the animals look from a different source.