Cut the paneer, peppers, and red onion into 1.5-inch cubes. If you are using a store-bought paneer, then soak the paneer cubes in hot water for 10 mins to make it soft.
Add all the marination ingredients except paneer and veggies to a mixing bowl and mix well.
Now add the paneer cubes, pepper cubes, and onion petals to the marination mixture and mix well until everything is coated well. Marinate for a minimum of 30 mins up to overnight if you have time.
Now thread the paneer and veggie cubes onto skewers leaving space between each piece(very important for a good air fryer paneer) and alternating between paneer and veggie pieces. Note: If you are using wooden skewers, soak them for 30 mins in water before using them.
Place the paneer skewers inside the air fryer onto the slotted plate or if provided, on a skewer rack. You can brush oil lightly on the air fryer surface before if you prefer but not necessary. Imp Note: Do not crowd the air fryer, Make sure to place the skewers without touching each other, otherwise they will steam instead of air frying.
Now air fry paneer skewers on 350F for 12 to 14 mins. You can lightly brush with oil halfway through if they look dry but as the marination has oil in it it is not necessary. If you make sure to place the skewers leaving enough space between pieces and also between skewers, then no need to turn halfway through.
Start checking at 10 mins and take them out carefully when they are done to your preference.
Sprinkle with little chat masala and lemon juice and serve hot with sliced onions on the side.