Money inflation is very important fact while you calculate your return on investment or long term capital gain. The amount of goods and service that a 100 rupees currency note can buy, should be reduced year after year. This reduction in purchasing power of money is known as money inflation. Hence, if you sold a gold coin for Rs. 1 lakh today which was purchased 10 years ago for Rs. 20 Thousand. then your gain from this sale will be much lesser than Rs. 80 Thousand. Because 20 thousand rupees cannot buy the same gold coin today, So, at first you have to determine the current value of  the 20 thousand rupees of 10 years ago. To do this you need to know the cost inflation index for both of the year.

For this example, you purchased the gold coin for Rs. 20,000 on FY: 2007-08, when the inflation index was 551 and you sold the same for Rs. 1,00,000 on FY: 2017-18, when the inflation index was 1159.
Hence, today the Rs. 20,000 of FY: 2007-08 should be valued at Rs. 42068.97 (20,000*1159/551), that is known as indexed cost of acquisition, and the profit will be Rs. 57931.03 (1,00,000 - 42,068.97)

The Cost Inflation Index Chart till FY: 2017-18 is given below: 
(You can also try our "Money inflation calculator")

Financial Year	Index	Financial Year	Index
1981-82	100	2000-01	406
1982-83	109	2001-02	426
1983-84	116	2002-03	447
1984-85	125	2003-04	463
1985-86	133	2004-05	480
1986-87	140	2005-06	497
1987-88	150	2006-07	519
1988-89	161	2007-08	551
1989-90	172	2008-09	582
1990-91	182	2009-10	632
1991-92	199	2010-11	711
1992-93	223	2011-12	758
1993-94	244	2012-13	852
1994-95	259	2013-14	939
1995-96	281	2014-15	1024
1996-97	305	2015-16	1081
1997-98	331	2016-17	1125
1998-99	351	2017-18	1159
1999-00	389	2018-19	To be announced!