Heat 1/2 tablespoon butter in a pan. Add all the ingredients for the paste, except water and saute for around a minute.
Add water, cover the pan and allow to cook for around 20 minutes. After 20 minutes, switch off the gas and allow the mixture to reach room temperature.
Once the cooked ingredients reach room temperature, put everything in a grinder and make a fine paste.
Strain the paste with a large strainer to get a nice smooth and creamy paste.
Heat 1 tablespoon butter in a pan. Add chili and turmeric powder. Saute for a few seconds.
Add shahi paneer paste, mix and cook for around 3-4 minutes. Add more water if the gravy is too thick.
Next, add paneer cubes and cream. Mix and cook around 2 minutes, stirring continuously.
Finally, add garam masala, kasoori methi, mix and cook for another minute. Switch off the gas.
Garnish with chopped coriander leaves or kasoori methi and serve hot with roti, naan or rice.