After going through the documentation, it appears that this is the default behavior of DBT, to update this, we need to change the following macro as: {% macro generate_schema_name(custom_schema_name, node) -%}

{%- set default_schema = target.schema -%}
{%- if custom_schema_name is none -%}

    {{ default_schema }}

{%- else -%}

   {{ custom_schema_name | trim }}

{%- endif -%}

{%- endmacro %}