Take a wok or a non-stick frying pan and heat it on a low flame on your gas stove.
When it is hot, put 7 medium pieces of dry Kashmiri red chilies, one nutmeg, 1 tsp cinnamon sticks broken into small pieces, ½ tsp cloves, 1 tsp of black pepper, 3 tsp of coriander seeds, 2 tsp of cumin seeds, 1 tsp of fennel seeds, and one large mace torn into pieces.
Stir the ingredients continuously on a low flame for about 1 minute to dry roast them to get rid of the moisture. Transfer them to a plate.
Now, in the same frying pan or wok, add 2 tsp of dry fenugreek leaves (kasturi methi) and 5 medium pieces of bay leaves.
Stir them gently for about 15 seconds if the pan is too hot or for 30 seconds if the pan is moderately hot. Turn the flame of your gas stove off when it is done.
Transfer the content to the plate where you have transferred the other spices before. Set it aside for some time to let the ingredients cool off completely.
Now, take a grinder.
Transfer the cool ingredients into the grinder.
Now, add 1 tsp of garlic powder, 1 tsp of ginger powder, 1 tsp of turmeric powder, 1 tsp of sugar, and 1 tsp of cornflour to the spices directly in the grinder.
Grind them nicely into a fine powder. Grind it a couple of times in short intervals for best results.
Transfer the ground spices onto a bowl and your paneer masala powder is ready.