In a budget less than 1-2 lacs, a 7.1 is out of question unless you are buying an entry level HTiB from Onkyo.
I would suggest a good quality 5.1 setup (assuming that music isn't as important as movies are).
For 40k, you can get Q Acoustic HTiB. For about half of it you can get Polk RM6750 or Polk 705.
You can also get Mission MV-8 HTiB for about 26k.
With your budget you can go for:
Wharf 9.1 + Wharf 9.0 + Wharf center + entry level sub
If you are in the states, you can go for this combo off ebay Polk
Monitor 50 $180
Monitor 30 $120 approx
Center
PSW110 $100-150
Will set you back around 25-30k + customs + extra luggage charges, so will turn out to be over 40k, but still lower than what you would need to pay over here