Ingredients
2 tbsp butter
1 tbsp oil
1 medium onion, roughly chopped
4 medium tomatoes, roughly chopped
10–12 cashew nuts
3–4 garlic cloves
1-inch piece ginger
1 bay leaf
1 tsp Kashmiri red chilli powder
1 tsp coriander powder
½ tsp garam masala
¼ tsp turmeric powder
Salt to taste
½ cup cream (or cooking cream)
½ cup water (adjust as needed)
250 g paneer, cubed
1 tbsp butter
Garnish
1 tbsp cream
1 tsp crushed dried fenugreek leaves (kasuri methi)
Fresh coriander leaves
Preparation
Heat oil and 1 tbsp butter in a pan.
Add onion, tomatoes, cashews, ginger, and garlic.
Cook for 8–10 minutes until tomatoes soften completely.
Cool slightly and blend into a smooth paste.
In the same pan, melt the remaining butter.
Add bay leaf and sauté briefly.
Add the blended paste and cook for 4–5 minutes.
Stir in chilli powder, coriander powder, turmeric, sugar (if using), and salt.
Cook until the mixture thickens and the butter begins to separate.
Add water and simmer for 3–4 minutes.
Stir in cream and garam masala.
Add crushed kasuri methi.
Lightly sauté paneer cubes in butter for 1–2 minutes (optional).
Add paneer to the gravy and simmer gently for 2–3 minutes.
Avoid overcooking, which can make paneer tough.
Garnish with cream and fresh coriander.
Serving suggestions

Paneer butter masala goes well with  butter naan, tandoori roti, jeera rice, etc.