What are the advantages of contract employees over permanent in smaller firms (software consulting)?

Hi i am new in to this HR field wanted to know details
1. an organization with less than 10 employees have no leaves for them and any leave taken can be deducted in the wages ( even contract basis will they have leaves)
2. what are the advantages of contract employees over permanent in smaller firms (software consulting)
3. what is the maximum probation period and during this period are they entitled for leaves.

The firm will be covered under the Shop & Establishment Act of the respective state. You may consult it regarding the issues raised by you.

I do not know where your firm located. In AP & Telangana, Contract workers are entitled for one day leave for every 20 working days.
There is no Probation period for contract worker.
You need to assess yourself the advantages based on your pay structure etc., It will be difficult to advise in this regard.

Today there is no difference between the employee of an establishment, contract employee and employees provided by labor supplier agreement.
All the applicable laws are applied.
If the contract employee are a piece meal worker as per production then no leave etc. will be accrued to them.
But if they work as like that of a company employee, then weekly holiday and other leave entitlement as per Labour Law that is the minimum is applicable.
Please buy Bare Laws of all the connected laws and get yourself familiar with this.
Law prescribe minimum, then it is the establishment that decide either to follow the labor laws and give additional benefits.
Say as per labor Law holidays are declared as per Factories and Establishment act. Govt. also declares holidays that are applicable to Labour from time to time. Many companies follow whenever banks are closed during festivals.(except the weekly holidays they follow for normal working)
So these are a connected thing to discuss with the company and what the law stiputates.