Paneer Capsicum Masala | Paneer Capsicum Gracy | Paneer Butter Masala | Butter Paneer

Paneer Capsicum Masala | Paneer Capsicum Gracy | Paneer Butter Masala | Butter Paneer

Paneer Capsicum Masala is another popular North Indian delicacy. It is also well known as “Paneer Butter Masala”, “Malai Paneer” and “Butter Paneer”. You will find this curry at any North Indian restaurant. It’s a vegetarian alternative to “Butter Chicken” or “Chicken Tikka Masala”. Here, Paneer is an Indian cottage cheese used in many Indian dishes. This Paneer curry goes well with Indian bread like Roti, Paratha, Tandoori Naan, Puri or Chapati. 

What’s more, Paneer Capsicum Masala has a mildly sweet, creamy and spicy taste. It is sweet and creamy because of the onions, cashews, butter and cream. And it’s spicy because of the Indians spices. The overall taste is delightful and pleasing to our taste buds. 

And in this recipe, I have skipped cream because I like it spicy. You are free to use cream if you like. This curry is easy to prepare and can be served as a main course for family dinners, get-togethers or if you have guests over. I hope you enjoy cooking this flavourful curry for your family and friends.

Paneer Capsicum Masala | Paneer Capsicum Gracy | Paneer Butter Masala | Butter Paneer

Recipe by Nutan BhandariCourse: Lunch, Dinner, Main CourseCuisine: Indian


Prep time


Cooking time


Total time




  • 10-15 strands of spinach leaves (palak)

  • 100 gms of Indian cottage cheese (paneer)

  • 1 large diced onion

  • 1 medium chopped onion

  • 1 large chopped tomato

  • 2 green chillies

  • 10-12 soaked cashews

  • 1 tablespoon dry fenugreek leaves (kasuri methi)

  • 1/2 teaspoon garam masala

  • 1/2 teaspoon cumin powder

  • 1/2 teaspoon coriander powder

  • 1/2 teaspoon red chilli powder

  • 1 star anise (badam phool)

  • 1 bay leaf (tej patta)

  • 1 tablespoon unsalted butter

  • 2 tablespoon oil

  • Salt to taste


  • Blanch the spinach. Add it to a mixing jar and grind it into a puree. 

  • Heat 1 tablespoon oil in a pot (kadai). 

  • Add the diced onion and green chillies. Saute until the onion turns golden brown. 

  • Add the chopped tomato and saute it for 5-7 minutes. 

  • Add the soaked cashews and sauteed vegetables to a mixing jar. Grind them into a thin paste.

  • Heat 1 tablespoon oil in the same pot (kadai). 

  • Add the chopped onion, star anise (badam phool), bay leaf (tej patta), paneer cubes, and salt to taste. Saute until the paneer and onions turn golden brown. 

  • Add the thin paste of sauteed vegetables and cashews. 

  • Add garam masala, cumin powder, coriander powder, and red chilli powder. Mix all the ingredients well. 

  • Add dry fenugreek leaves (kasuri methi) and the spinach puree. 

  • Mix the puree with the other ingredients well. Once the curry starts boiling, place the lid and let it boil for 10 minutes on a low flame. 

  • Open the lid and add the butter. Turn off the flame.

  • Palak Paneer is ready. Serve it with roti, naan, steamed rice or jeera rice. 


  • Kasuri methi (dry fenugreek leaves) give a nice flavor and has many health benefits. 
  • I have not used cream in this recipe, you can use it if you like. 
  • Make sure you use fresh spinach leaves. You can also use the stems that are tender. 

How to make Paneer Capsicum Masala step-by-step? 

Step 1: Soak 10-12 cashews for 30 minutes.

Step 2: Heat 1 tablespoon oil in a pot. 

Step 3: Add 1 large diced onion and saute until it’s golden brown. Then add 1 large chopped tomato. 

Step 4: Add the sauteed onion and tomato and soaked cashews to a mixing jar. Grind them into a thin paste. 

Step 5: Heat 2 tablespoons of oil in the same pot. 

Step 6: Add 1 medium chopped onion and ¼ teaspoon turmeric powder. Saute until the onion turns golden brown. 

Step 7: Add 200 gms of paneer cubes. Mix all of them. Saute until the paneer cubes become golden brown.

Step 8: Add 1 medium chopped capsicum and ½ teaspoon ginger-garlic paste. Mix them well.

Step 9: Add the onion and tomato puree. Mix it well. 

Step 10: Add ½ teaspoon of garam masala, ½ teaspoon cumin powder, ½ teaspoon coriander powder, salt to taste, 1 teaspoon red chilli powder, and 1 teaspoon jaggery. 

Step 11: Mix all ingredients well. Add little by little water based on the thickness you prefer while you stir the mixture. 

Step 12: Now add 1 tablespoon of dry fenugreek leaves (Kasuri methi) and let it boil. 

Step 13: Once the curry starts boiling add 1 teaspoon of butter. 

Step 14: Paneer Capsicum Masala is ready. Garnish it with coriander leaves. Serve it hot with tandoori roti, naan or chapati. 

2 thoughts on “Paneer Capsicum Masala | Paneer Capsicum Gracy | Paneer Butter Masala | Butter Paneer

  1. I have been surfing on-line greater than 3 hours lately, yet I by no
    means found any fascinating article like yours. It’s lovely worth sufficient
    for me. Personally, if all site owners and bloggers made excellent content as you probably did, the web can be a
    lot more useful than ever before.

    My web site Royal CBD

Leave a Reply

Your email address will not be published. Required fields are marked *