Bereaved family members were present on the occasion.
The body, brought here from Kashmir late last night, was kept at the Officers Training Academy hospital for the public to pay their last respects.
State Governor K Rosaiah expressed shock and grief over the death.
The Nation, especially the Indian Army, has lost a brave and young promising officer and his death is an irreparable loss, he said in a release today, condoling the death.
A wreath was placed on the body on behalf of the Governor, the Raj Bhavan release said.
Chief Minister Jayalalithaa had yesterday expressed grief over the death of Varadarajan and announced a solatium of Rs. 10 lakh to the bereaved family.
Major Varadarajan was killed along with a jawan in the encounter.
Security forces had launched a search operation in Karewa Malino in Shopian, 55 km from Srinagar on April 25, following information about presence of three militants, two locals and one foreigner.
The encounter ended Saturday morning. The bodies of three militants were also recovered.