Sachin Tendulkar will be back in action after his two-month break, having skipped the limited overs series in Sri Lanka recently, while young batsman Cheteshwar Pujara has predictably got the nod as replacement for the retired Rahul Dravid in the longer version.
Pacer Ishant Sharma, who has recuperated from a successful ankle surgery, is also back in the 15-member squad along with Suresh Raina who will be the reserve middle-order batsman.
This was the last meeting of the current selection committee headed by Krishnamachari Srikkanth which would be replaced at the Cricket Board's next AGM in September. There were a lot of speculations in the past few days regarding Laxman's future, especially as the first Test was being played at his hometown in Hyderabad.
However, the 37-year-old's selection means that the talks of an impending retirement has been put to rest for the time being.
But at the same time, the pressure to perform will be immense on the stylish Hyderabadi batsman as Raina will be itching to get a chance on the sub-continental shirtfronts.
The surprise pick certainly is leg-spinner Piyush Chawla, who last played for India in the 2011 World Cup and since then has been confined to the sidelines. He didn't set the domestic stage on fire having picked only 23 wickets in seven Ranji Trophy matches for UP last season. His poor strike rate of 72 plus (12 overs for a wicket) also raises questions about whether this performance warrants a place in the squad.
However, his class and experience in the shortest format was the logic behind his selection apart from the popular sentiment to bring him back which definitely played a part.
Harbhajan's selection was simply based on his past record as India's spin department is pretty thin on experience. Harbhajan last played for India against England at Trent Bridge last July-August before he flew back with an injury and has not been considered for selection since then.
The surprise inclusion has to be Piyush Chawla, who has done precious little in the domestic season gone by but dearth of quality leg-break bowlers was the reason behind the Uttar Pradesh player getting the nod ahead of the likes of Rahul Sharma and Amit Mishra.
The inclusion of Balaji is based on his impressive performance for Kolkata Knight Riders in the last two editions of the Indian Premier League. The 30-year-old's ability to bowl effective slower deliveries at the death has led to his selection over Umesh Yadav.
The only tearaway pacer in the squad is Ashok Dinda while the other two seamers will be the experienced duo of Zaheer Khan and Irfan Pathan.
The squad consists of eight players -- Mahendra Singh Dhoni, Gautam Gambhir, Virender Sehwag, Yuvraj Singh, Irfan Pathan, Rohit Sharma, Piyush Chawla and Harbhajan Singh -- who were a part of India's historic T20 triumph in South Africa five years back.
Gambhir being named as a deputy to Dhoni was a reward for leading Kolkata Knight Riders to IPL triumph.
Squad for T20 World Cup and T20s against New Zealand: Mahendra Singh Dhoni (captain), Gautam Gambhir (vice-captain), Virender Sehwag, Yuvraj Singh, Virat Kohli, Suresh Raina, Manoj Tiwary, Rohit Sharma, Irfan Pathan, Ravichandran Ashwin, Zaheer Khan, Lakshmipathy Balaji, Piyush Chawla, Harbhajan Singh, Ashok Dinda.