Instant Pot Method: Press "Yogurt" and press the "Adjust" button to "More". The screen should display "boil". The milk will begin to boil. When it's done, the Instant Pot beeps and displays "yogt".
Cancel "yogurt" and turn on Saute mode and adjust to "Less". Adding a little at a time, stir in white vinegar or lemon juice.
Cancel Saute once the milk begins to curdle turn off the heat. Stir 2-3 times in large motions to allow bigger paneer clumps to form.
Pour 1-2 tablespoons water in a large saucepan. This prevents the milk from scalding. Now pour the milk into the pan . Bring it to a boil on medium heat. Stir occasionally to prevent scorching. Once the milk comes to a boil, reduce the heat to medium-low.
Stir in white vinegar or lemon juice, adding a little at a time.
Turn off the heat when the milk begins to curdle. Stir 2-3 times in large motions to allow bigger paneer clumps to form.
Strain and Set Paneer
Let the mixture rest for 5 minutes for the cheese curds to set. At this point, you should be able to see the clear yellowish whey separate from the cheese curds.
Place a large sieve or colander over a bowl. Line it with thick cheesecloth (or use two layers). Carefully pour the curdled mix in to the cheesecloth.
Place the cheesecloth back in a colander and rinse it under cold running water to get rid of any residual acidic taste.
Pulling together the ends of the cheesecloth, twist and squeeze out the whey. (see notes for using the discarded whey). Repeat 2-3 times to get get rid of excess moisture.
Wrap up the paneer ball tightly in the cheesecloth and gently flatten it using your hands. Place it on a plate lined with a couple of paper towels. Place another plate on top. Now place a heavy object, like a pasta sauce jar or a heavy bottom sauce pan over the plate to weigh it down.
Let the paneer set for 45 minutes to an hour. After that, remove the paneer from the cheesecloth. If not using it right away, refrigerate the paneer disc in any airtight container.
When ready to use, cut the paneer into ½-¾ inch cubes as your liking. Store any leftover cubes in an airtight container in the refrigerator for 3-4 days, or freeze them for up to 2 months.
Choice of milk: Use whole milk for a more creamier paneer. For a lower calorie paneer, use 2% milk. I would not recommend using 1% or non-fat milk in this recipe.
Choice of Acid: White vinegar or lemon juice, both work well here. Any other vinegar will alter the taste of paneer. I prefer to use white vinegar over lemon juice as it gives consistent results.
Malai paneer: To make this richer variation of paneer, substitute ¼ cup of milk with heavy whipping cream.
Stir in large motions: Stir 2-3 times in large motions to allow bigger paneer clumps to form. If you stir too vigorously, the paneer will be crumbly.
Instant Pot vs Stove: The Instant Pot is more hands-off and gives the added advantage of setting the milk to boil without any monitoring. You can walk way until it displays "yogt".
Left-over whey: This yellowish clear liquid is very nutritious and can be used to knead roti dough instead of water.
Note: The nutrition facts below are my estimates based on 2% milk. If you are following any diet plan, I recommend cross-checking with your preferred nutrition calculator.