I'm replying only about the TDS part of your query. I'm not aware about Professional Tax.
There are mainly 4 kinds of services which a company uses regularly -contractors, professionals, rent, and sometimes advertising. The TDS criteria for each of these is as follows :
1. Contractors -means any contract for supply of labour for works contract. Here 'works' includes catering, advertising, broadcasting, transporter services either for goods or people. The max amount where TDS is not required to be deducted is a SINGLE payment of upto 20,000, or TOTAL ANNUAL payment of upto 50,000 payable to the receipient.
Which means if in a year you are paying somebody 4 times (lets say) under any contract whose value is more than 50,000 in a year, the normal practice is to deduct TDS on all the instalments even if the value of each instalment is less than 20,000. This is because you already know you have to pay more than the exempted amount by the end of the year. But, if you do not have a contract, and the same contractor does individual jobs for you 4 times in a year, then so long as the individual payments do not exceed 20,000, you dont have to deduct TDS. However, as soon as the sum total of the payments exceeds 50,000 in 1 year, you have to deduct the total TDS from the total payments made so far from the next individual payment. The base TDS rate is 2%.
2. Advertising -this is clubbed under contractors. The exempted amounts and treatment and TDS rate is the same as above. However, if the client is releasing the payment directly to the media, not thru any advertising agency, then the base rate is 1%.
3. Professional Service -this I think would be the largest category for you. This would include placement consultants, job portals, retainers etc. Exempt limit is aggregate 20,000 annually. Base rate is 5%.
4. Rent -Exempt limit is 1,20,000 annually. Advance rent & non-refundable deposits are also subject to TDS. If the property is co-owned by 2 or more owners, then the exempt limit will apply to each of the co-owners separately. The base rate if the recipient is individual is 15%, all other cases it is 20%. Also, if there are two lease contracts, 1 for the propoerty & 2nd for the furniture & fixtures in that same property owned by the same landlord, then the total of the lease amounts under both the contracts are to be considered while calculating the TDS.
Please note that the final TDS rate will also include surcharge and cess. This depends on the amount paid & the kind of recipient -individual, co-operative society or corporate entity. Kugan Paramasivam has already given the rates briefly.
Hope this is actually useful, and doesnt confuse you even more.... :D
9th December 2006 From India, Gurgaon