Washing Allowance is exempted from ESI deduction; however, there is no limit prescribed. It should be a reasonable and justifiable amount. A sum paid as Washing Allowance to defray special expenses entailed by the nature of employment is only excluded from part of wages under section 2(22).
Vide memorandum No. P-11/13/97-Ins IV dated 6/11/2000, the Headquarters came out with consolidated instructions in order to form a uniform policy as to what constitutes part of wages under the Act. In the said memorandum, Washing Allowance is listed as one of the items which do not form part of wages.
Even there is a very old instruction in this regard vide Memorandum No. III. J/2/1/65 dated 8/02/1967.
The above instructions are not available with me, but the reference to the same can be obtained from the revenue manual of the Corporation.
Regards