You can use your laptop as a source to AV Reciever using the headphone jack as the out. This is pretty common and works really well with Windows Media Player or any other good software. Many of these soft players are pretty neat as you can make play lists on the fly. These are not true hifi audio but its not the point really on a PC system.
Sound however is really good with any decent receiver. Pick up some of the commonly available HT setups from Onkyo or Yamaha (long list available as you'll see). I talk up Onkyo because they have increased their availability in many consumer stores and Onkyo India offers very good support. Price wise as well they are reasonable and will fall in your 35K budget.
Onkyo speakers are not much to talk about and I would recommend the Jamo setup they seem to be putting together at many places. But you have a good selection at many suppliers.
Always hear the system before you buy. Make sure you get speaker wires as well. You should also pick up decent voltage and power conditioner to protect your system. They also make your sound better.
Note: For watching DVDs you will need to add a good
DVD codec which you can buy online. Prices start at around $15 (Rs 675).