In a mixing bowl, add yogurt along with turmeric powder, onion powder, garlic powder, and salt. Whisk everything together until well combined.

Cut the paneer into your preferred shape (cubes work best for this recipe). Add the paneer to the yogurt mixture.

Gently toss to coat all the pieces evenly. Let it marinate for at least 30 minutes to absorb the flavors.

Heat ghee in a pan over medium heat. Once hot, add the marinated paneer cubes and shallow fry until they turn light golden on all sides. Avoid over-frying, as paneer can turn rubbery if cooked too long. Remove the fried paneer and place it on a plate. Set it aside for now. Chef tip: Reserve the leftover yogurt marinade — it will be used later in the recipe

While the paneer is marinating, start preparing the flavorful masala that forms the base of this dish.

Heat a little oil in a pan over medium heat. Once hot, add cumin seeds, coriander seeds, and fenugreek seeds. Roast for 30 to 40 seconds, or until they begin to release a fragrant aroma.

Add dried red chilies, tamarind, and garlic to the pan. Continue roasting for 1 to 2 minutes, until the garlic turns golden and everything is lightly toasted.

Stir in the grated or shredded coconut and roast for another 2 minutes, or until it turns light brown. This adds a nutty depth and natural sweetness to the masala.

Transfer everything to a plate and let it cool completely. Once cooled, add the mixture to a blender with a little water and grind it into a smooth, creamy paste.

This fresh, homemade masala paste is what gives the recipe of Kadai Paneer its unique, restaurant-style flavor.

Use the same pan you used to fry the paneer. In the remaining ghee, add the freshly ground masala paste. Sauté for 3 to 4 minutes on medium heat to allow the flavors to develop.

Stir in the chopped bell peppers and continue sautéing for another 2 to 3 minutes. They should soften slightly while still retaining some crunch.

Pour in the reserved yogurt marinade from earlier. Mix well and cook until the mixture comes to a gentle boil. Add salt to taste and a little sugar to balance the sourness and spiciness of the gravy.

Gently fold in the fried paneer cubes and simmer for a minute or two, just until everything is well-coated and heated through.

Serve this Kadai Paneer hot, garnished with fried curry leaves or fresh coriander for an added burst of flavor. It pairs wonderfully with Indian flatbreads like roti, chapati, naan, or bhakri.