@Wolfi, @prachi I'm really sorry for the late response.
@Wolfi, I think the problem is that you are still using the default version of SwiftPM when using the --toolchain option. I guess that only the compiler invocations are directed to the toolchain you specify with the flag. I usually just override my PATH locally to point to whatever toolchain I need:
export PATH=/Library/Developer/Toolchains/swift-latest.xctoolchain/usr/bin:"${PATH}”
@prachi I haven't checked with the exact version you are using, but you should be able to get it to work using the instructions here.