In a medium saucepan, combine water, crushed cardamom pods, cloves, cinnamon stick, sliced ginger, peppercorns, and nutmeg, then bring to a boil over medium-high heat.
Reduce heat to low and simmer the spices for 10 minutes to infuse the water.
Add black tea bags or loose tea and steep for 3-4 minutes. Do not over-steep; it can turn bitter.
Pour in the milk and honey, stirring to combine, and heat through until steaming but not boiling (about 2-3 minutes).
Strain the chai through a fine mesh strainer into mugs, discarding the tea bags and whole spices, then serve immediately with additional honey if desired.