An indulgence during the Renaissance was the forgiveness of sin in exchange for penance. In most cases, penance took the form of a cash donation to the Catholic Church, and the person making the donation was given a piece of paper that stated his soul was ready to be admitted to heaven.
The sale of indulgences was started by Pope Leo X, and it was designed to raise money to rebuild St. Peter's Basilica in Rome. If someone failed to buy indulgences, his sins were left on his soul, and he was forced to atone for them in Purgatory. Purgatory is a type of limbo between Heaven and Earth, and in the Catholic tradition, it is where souls go to finish atoning for their sins before they gain admittance into heaven.
The sale of indulgences was criticized by leaders of the Protestant Reformation such as Martin Luther. Luther believed that the faithful should not have to buy forgiveness from sin. Rather, he believed that they would be admitted to heaven based on their faith in Jesus alone.
Contemporary Catholics no longer buy indulgences. However, they still believe that one must do penance to be forgiven for a sin. Penance may take the form of saying several prayers, doing a good deed or another task assigned by the priest to the sinner.