diff --git a/CHANGELOG.md b/CHANGELOG.md
index a63e51de9c3..b5f131a53ba 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -109,6 +109,7 @@ Response 2:
 
 ### Bug fixes and improvements
 
+- server: add support for custom scalar in action output type (#4185)
 - server: add support for MSSQL event triggers (#7228)
 - server: update pg_dump to be compatible with postgres 14 (#7676)
 - server: fix bug where timestamp values sent to postgres would erroneously trim leading zeroes (#8096)
diff --git a/server/src-lib/Hasura/Backends/Postgres/SQL/Types.hs b/server/src-lib/Hasura/Backends/Postgres/SQL/Types.hs
index 0aea44a48e7..7d4845743a9 100644
--- a/server/src-lib/Hasura/Backends/Postgres/SQL/Types.hs
+++ b/server/src-lib/Hasura/Backends/Postgres/SQL/Types.hs
@@ -39,6 +39,7 @@ module Hasura.Backends.Postgres.SQL.Types
     qualifiedObjectToName,
     PGScalarType (..),
     textToPGScalarType,
+    pgScalarTranslations,
     pgScalarTypeToText,
     PGTypeKind (..),
     QualifiedPGType (..),
diff --git a/server/src-lib/Hasura/GraphQL/Execute/Action.hs b/server/src-lib/Hasura/GraphQL/Execute/Action.hs
index 0e6de538c27..29fe16f1e8a 100644
--- a/server/src-lib/Hasura/GraphQL/Execute/Action.hs
+++ b/server/src-lib/Hasura/GraphQL/Execute/Action.hs
@@ -142,7 +142,7 @@ resolveActionExecution ::
   Maybe GQLQueryText ->
   ActionExecution
 resolveActionExecution env logger _userInfo IR.AnnActionExecution {..} ActionExecContext {..} gqlQueryText =
-  ActionExecution $ first (encJFromOrderedValue . makeActionResponseNoRelations _aaeFields) <$> runWebhook
+  ActionExecution $ first (encJFromOrderedValue . makeActionResponseNoRelations _aaeFields _aaeOutputType _aaeOutputFields True) <$> runWebhook
   where
     handlerPayload = ActionWebhookPayload (ActionContext _aaeName) _aecSessionVariables _aaePayload gqlQueryText
 
@@ -166,8 +166,8 @@ resolveActionExecution env logger _userInfo IR.AnnActionExecution {..} ActionExe
           _aaeResponseTransform
 
 -- | Build action response from the Webhook JSON response when there are no relationships defined
-makeActionResponseNoRelations :: IR.ActionFields -> ActionWebhookResponse -> AO.Value
-makeActionResponseNoRelations annFields webhookResponse =
+makeActionResponseNoRelations :: IR.ActionFields -> GraphQLType -> IR.ActionOutputFields -> Bool -> ActionWebhookResponse -> AO.Value
+makeActionResponseNoRelations annFields outputType outputF shouldCheckOutputField webhookResponse =
   let mkResponseObject :: IR.ActionFields -> HashMap Text J.Value -> AO.Value
       mkResponseObject fields obj =
         AO.object $
@@ -191,13 +191,27 @@ makeActionResponseNoRelations annFields webhookResponse =
    in -- NOTE (Sam): This case would still not allow for aliased fields to be
       -- a part of the response. Also, seeing that none of the other `annField`
       -- types would be caught in the example, I've chosen to leave it as it is.
-      case webhookResponse of
-        AWRArray objs -> AO.array $ map mkResponseArray objs
-        AWRObject obj -> mkResponseObject annFields (mapKeys G.unName obj)
-        AWRNum n -> AO.toOrdered n
-        AWRBool b -> AO.toOrdered b
-        AWRString s -> AO.toOrdered s
-        AWRNull -> AO.Null
+      -- NOTE: (Pranshi) Bool here is applied to specify if we want to check ActionOutputFields
+      -- (in async actions, we have object types, which need to be validated
+      -- and ActionOutputField information is not present in `resolveAsyncActionQuery` -
+      -- so added a boolean which will make sure that the response is validated)
+      if gTypeContains isCustomScalar (unGraphQLType outputType) outputF && shouldCheckOutputField
+        then AO.toOrdered $ J.toJSON webhookResponse
+        else case webhookResponse of
+          AWRArray objs -> AO.array $ map mkResponseArray objs
+          AWRObject obj ->
+            mkResponseObject annFields (mapKeys G.unName obj)
+          AWRNull -> AO.Null
+          _ -> AO.toOrdered $ J.toJSON webhookResponse
+
+gTypeContains :: (G.GType -> IR.ActionOutputFields -> Bool) -> G.GType -> IR.ActionOutputFields -> Bool
+gTypeContains fun gType aof = case gType of
+  t@(G.TypeNamed _ _) -> fun t aof
+  (G.TypeList _ expectedType) -> gTypeContains fun expectedType aof
+
+isCustomScalar :: G.GType -> IR.ActionOutputFields -> Bool
+isCustomScalar (G.TypeNamed _ name) outputF = isJust (lookup (G.unName name) pgScalarTranslations) || (Map.null outputF && (not (isInBuiltScalar (G.unName name))))
+isCustomScalar (G.TypeList _ _) _ = False
 
 {- Note: [Async action architecture]
 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
@@ -266,7 +280,7 @@ resolveAsyncActionQuery userInfo annAction =
           IR.AsyncOutput annFields ->
             fromMaybe AO.Null <$> forM
               _alrResponsePayload
-              \response -> makeActionResponseNoRelations annFields <$> decodeValue response
+              \response -> makeActionResponseNoRelations annFields outputType Map.empty False <$> decodeValue response
           IR.AsyncId -> pure $ AO.String $ actionIdToText actionId
           IR.AsyncCreatedAt -> pure $ AO.toOrdered $ J.toJSON _alrCreatedAt
           IR.AsyncErrors -> pure $ AO.toOrdered $ J.toJSON _alrErrors
@@ -570,7 +584,7 @@ callWebhook
                 | HTTP.statusIsSuccessful responseStatus -> do
                   modifyQErr addInternalToErr $ do
                     webhookResponse <- decodeValue responseValue
-                    validateResponse responseValue outputType
+                    validateResponse responseValue outputType outputFields
                     pure (webhookResponse, mkSetCookieHeaders responseWreq)
                 | HTTP.statusIsClientError responseStatus -> do
                   ActionWebhookErrorResponse message maybeCode maybeExtensions <-
@@ -604,44 +618,37 @@ callWebhook
                   throwUnexpected $
                     "expecting not null value for field " <>> fieldName
 
-      isScalar :: Text -> Bool
-      isScalar s
-        | s == "Int" = True
-        | s == "Float" = True
-        | s == "String" = True
-        | s == "Boolean" = True
-        | otherwise = False
-
       -- Validates the webhook response against the output type
-      validateResponse :: J.Value -> GraphQLType -> m ()
-      validateResponse webhookResponse' outputType' =
-        case (webhookResponse', outputType') of
-          (J.Null, _) -> unless (isNullableType outputType') $ throwUnexpected "got null for the action webhook response"
-          (J.Number _, (GraphQLType (G.TypeNamed _ name))) -> do
-            unless (G.unName name == "Int" || G.unName name == "Float") $
-              throwUnexpected $ "got scalar Number for the action webhook response, expecting " <> G.unName name
-          (J.Bool _, (GraphQLType (G.TypeNamed _ name))) ->
-            unless (G.unName name == "Boolean") $
-              throwUnexpected $ "got scalar Boolean for the action webhook response, expecting " <> G.unName name
-          (J.String _, (GraphQLType (G.TypeNamed _ name))) ->
-            unless (G.unName name == "String") $
-              throwUnexpected $ "got scalar String for the action webhook response, expecting " <> G.unName name
-          (J.Array _, (GraphQLType (G.TypeNamed _ name))) ->
-            throwUnexpected $ "got array for the action webhook response, expecting " <> G.unName name
-          (J.Array objs, (GraphQLType (G.TypeList _ outputType''))) ->
-            traverse_ (\o -> validateResponse o (GraphQLType outputType'')) objs
-          (ob@(J.Object _), (GraphQLType (G.TypeNamed _ name))) -> do
-            case J.parse (fmap AWRObject . J.parseJSON) ob of
-              J.Error s -> throwUnexpected $ "failed to parse webhookResponse as Object, error: " <> T.pack s -- This should never happen
-              J.Success (AWRObject awr) -> do
-                when (isScalar (G.unName name)) $
-                  throwUnexpected $ "got object for the action webhook response, expecting " <> G.unName name
-                validateResponseObject awr
-              J.Success _ ->
-                throwUnexpected "Webhook response not an object" -- This should never happen
-                -- Expected output type is an array and webhook response is not an array
-          (_, (GraphQLType (G.TypeList _ _))) ->
-            throwUnexpected $ "expecting array for the action webhook response"
+      validateResponse :: J.Value -> GraphQLType -> IR.ActionOutputFields -> m ()
+      validateResponse webhookResponse' outputType' outputF =
+        unless (isCustomScalar (unGraphQLType outputType') outputF) do
+          case (webhookResponse', outputType') of
+            (J.Null, _) -> unless (isNullableType outputType') $ throwUnexpected "got null for the action webhook response"
+            (J.Number _, (GraphQLType (G.TypeNamed _ name))) -> do
+              unless (G.unName name == G.unName intScalar || G.unName name == G.unName floatScalar) $
+                throwUnexpected $ "got scalar Number for the action webhook response, expecting " <> G.unName name
+            (J.Bool _, (GraphQLType (G.TypeNamed _ name))) ->
+              unless (G.unName name == G.unName boolScalar) $
+                throwUnexpected $ "got scalar Boolean for the action webhook response, expecting " <> G.unName name
+            (J.String _, (GraphQLType (G.TypeNamed _ name))) ->
+              unless (G.unName name == G.unName stringScalar || G.unName name == G.unName idScalar) $
+                throwUnexpected $ "got scalar String for the action webhook response, expecting " <> G.unName name
+            (J.Array _, (GraphQLType (G.TypeNamed _ name))) ->
+              throwUnexpected $ "got array for the action webhook response, expecting " <> G.unName name
+            (J.Array objs, (GraphQLType (G.TypeList _ outputType''))) ->
+              traverse_ (\o -> validateResponse o (GraphQLType outputType'') outputF) objs
+            (ob@(J.Object _), (GraphQLType (G.TypeNamed _ name))) -> do
+              case J.parse (fmap AWRObject . J.parseJSON) ob of
+                J.Error s -> throwUnexpected $ "failed to parse webhookResponse as Object, error: " <> T.pack s -- This should never happen
+                J.Success (AWRObject awr) -> do
+                  when (isInBuiltScalar (G.unName name)) $
+                    throwUnexpected $ "got object for the action webhook response, expecting " <> G.unName name
+                  validateResponseObject awr
+                J.Success _ ->
+                  throwUnexpected "Webhook response not an object" -- This should never happen
+                  -- Expected output type is an array and webhook response is not an array
+            (_, (GraphQLType (G.TypeList _ _))) ->
+              throwUnexpected $ "expecting array for the action webhook response"
 
 processOutputSelectionSet ::
   TF.ArgumentExp v ->
diff --git a/server/src-lib/Hasura/RQL/DDL/Action.hs b/server/src-lib/Hasura/RQL/DDL/Action.hs
index 62bdda91a5e..5de0f5bb17c 100644
--- a/server/src-lib/Hasura/RQL/DDL/Action.hs
+++ b/server/src-lib/Hasura/RQL/DDL/Action.hs
@@ -147,8 +147,10 @@ resolveAction env AnnotatedCustomTypes {..} ActionDefinition {..} allScalars = d
             pure aoTScalar
           | Just objectType <- Map.lookup outputBaseType _actObjects ->
             pure $ AOTObject objectType
+          | Just (NOCTScalar s) <- Map.lookup outputBaseType _actNonObjects -> do
+            pure (AOTScalar s)
           | otherwise ->
-            throw400 NotExists ("the type: " <> dquote outputBaseType <> " is not an object type defined in custom types")
+            throw400 NotExists ("the type: " <> dquote outputBaseType <> " is not an object or scalar type defined in custom types")
     -- If the Action is sync:
     --      1. Check if the output type has only top level relations (if any)
     --   If the Action is async:
diff --git a/server/src-lib/Hasura/RQL/Types/CustomTypes.hs b/server/src-lib/Hasura/RQL/Types/CustomTypes.hs
index 5091273e2f0..f6cb0b28354 100644
--- a/server/src-lib/Hasura/RQL/Types/CustomTypes.hs
+++ b/server/src-lib/Hasura/RQL/Types/CustomTypes.hs
@@ -6,6 +6,7 @@ module Hasura.RQL.Types.CustomTypes
     GraphQLType (..),
     isListType,
     isNullableType,
+    isInBuiltScalar,
     EnumTypeName (..),
     EnumValueDefinition (..),
     EnumTypeDefinition (..),
@@ -86,6 +87,15 @@ isListType (GraphQLType ty) = G.isListType ty
 isNullableType :: GraphQLType -> Bool
 isNullableType (GraphQLType ty) = G.isNullable ty
 
+isInBuiltScalar :: Text -> Bool
+isInBuiltScalar s
+  | s == G.unName intScalar = True
+  | s == G.unName floatScalar = True
+  | s == G.unName stringScalar = True
+  | s == G.unName boolScalar = True
+  | s == G.unName idScalar = True
+  | otherwise = False
+
 newtype InputObjectFieldName = InputObjectFieldName {unInputObjectFieldName :: G.Name}
   deriving (Show, Eq, Ord, Hashable, J.FromJSON, J.ToJSON, ToTxt, Generic, NFData, Cacheable)
 
diff --git a/server/tests-py/context.py b/server/tests-py/context.py
index 9b13fafdc01..41c39d179fb 100644
--- a/server/tests-py/context.py
+++ b/server/tests-py/context.py
@@ -372,7 +372,15 @@ class ActionsWebhookHandler(http.server.BaseHTTPRequestHandler):
 
         elif req_path == "/scalar-response":
             self._send_response(HTTPStatus.OK, "some-string")
+
+        elif req_path == "/json-response":
+            resp, status = self.json_response()
+            self._send_response(status, resp)
         
+        elif req_path == "/custom-scalar-array-response":
+            resp, status = self.custom_scalar_array_response()
+            self._send_response(status, resp)
+
         elif req_path == "/scalar-array-response":
             self._send_response(HTTPStatus.OK, ["foo", "bar", None])
 
@@ -602,6 +610,18 @@ class ActionsWebhookHandler(http.server.BaseHTTPRequestHandler):
     def null_response(self):
         response = None
         return response, HTTPStatus.OK
+    
+    def json_response(self):
+        response = {
+            'foo': 'bar'
+        }
+        return response, HTTPStatus.OK
+    
+    def custom_scalar_array_response(self):
+        response = [{
+            'foo': 'bar'
+        }]
+        return response, HTTPStatus.OK
 
     def recursive_output(self):
         return {
diff --git a/server/tests-py/queries/actions/sync/expecting_custom_scalar_array_response_success.yaml b/server/tests-py/queries/actions/sync/expecting_custom_scalar_array_response_success.yaml
new file mode 100644
index 00000000000..cd7b50fdc42
--- /dev/null
+++ b/server/tests-py/queries/actions/sync/expecting_custom_scalar_array_response_success.yaml
@@ -0,0 +1,12 @@
+description: custom scalar array response should be allowed
+url: /v1/graphql
+status: 200
+query:
+  query: |
+    mutation {
+      custom_scalar_array_response
+    }
+response:
+  data:
+    custom_scalar_array_response:
+      [foo: bar]
diff --git a/server/tests-py/queries/actions/sync/expecting_custom_scalar_response_success.yaml b/server/tests-py/queries/actions/sync/expecting_custom_scalar_response_success.yaml
new file mode 100644
index 00000000000..2eb6d2f4900
--- /dev/null
+++ b/server/tests-py/queries/actions/sync/expecting_custom_scalar_response_success.yaml
@@ -0,0 +1,12 @@
+description: custom scalar response should be allowed
+url: /v1/graphql
+status: 200
+query:
+  query: |
+    mutation {
+      custom_scalar_response
+    }
+response:
+  data:
+    custom_scalar_response:
+      foo: bar
\ No newline at end of file
diff --git a/server/tests-py/queries/actions/sync/expecting_jsonb_response_success.yaml b/server/tests-py/queries/actions/sync/expecting_jsonb_response_success.yaml
new file mode 100644
index 00000000000..d7d984402f2
--- /dev/null
+++ b/server/tests-py/queries/actions/sync/expecting_jsonb_response_success.yaml
@@ -0,0 +1,12 @@
+description: pgScalar (custom scalar) response should be allowed
+url: /v1/graphql
+status: 200
+query:
+  query: |
+    mutation {
+      pgscalar_response
+    }
+response:
+  data:
+    pgscalar_response:
+      foo: bar
\ No newline at end of file
diff --git a/server/tests-py/queries/actions/sync/schema_setup.yaml b/server/tests-py/queries/actions/sync/schema_setup.yaml
index 2a186c07ba6..04fb490521e 100644
--- a/server/tests-py/queries/actions/sync/schema_setup.yaml
+++ b/server/tests-py/queries/actions/sync/schema_setup.yaml
@@ -60,6 +60,9 @@ args:
         type: String
       - name: extensions
         type: json
+    
+    scalars:
+    - name: myCustomScalar
 
     objects:
     - name: UserId
@@ -442,6 +445,24 @@ args:
       output_type: String!
       handler: http://127.0.0.1:5593/scalar-response
 
+- type: create_action
+  args:
+    name: pgscalar_response
+    definition:
+      kind: synchronous
+      arguments:
+      output_type: json!
+      handler: http://127.0.0.1:5593/json-response
+
+- type: create_action
+  args:
+    name: custom_scalar_response
+    definition:
+      kind: synchronous
+      arguments:
+      output_type: myCustomScalar!
+      handler: http://127.0.0.1:5593/json-response
+
 - type: create_action
   args:
     name: scalar_array_response
@@ -451,6 +472,24 @@ args:
       output_type: '[String]!'
       handler: http://127.0.0.1:5593/scalar-array-response
 
+- type: create_action
+  args:
+    name: custom_scalar_array_response
+    definition:
+      kind: synchronous
+      arguments:
+      output_type: '[myCustomScalar!]!'
+      handler: http://127.0.0.1:5593/custom-scalar-array-response
+
+- type: create_action
+  args:
+    name: custom_scalar_nested_array_response
+    definition:
+      kind: synchronous
+      arguments:
+      output_type: '[[myCustomScalar!]]!'
+      handler: http://127.0.0.1:5593/custom-scalar-array-response
+
 - type: create_select_permission
   args:
     table: user
diff --git a/server/tests-py/queries/actions/sync/schema_teardown.yaml b/server/tests-py/queries/actions/sync/schema_teardown.yaml
index 3117fcd3d0c..76755cddc14 100644
--- a/server/tests-py/queries/actions/sync/schema_teardown.yaml
+++ b/server/tests-py/queries/actions/sync/schema_teardown.yaml
@@ -60,10 +60,26 @@ args:
   args:
     name: scalar_response
     clear_data: true
+- type: drop_action
+  args:
+    name: pgscalar_response
+    clear_data: true
+- type: drop_action
+  args:
+    name: custom_scalar_response
+    clear_data: true
 - type: drop_action
   args:
     name: scalar_array_response
     clear_data: true
+- type: drop_action
+  args:
+    name: custom_scalar_array_response
+    clear_data: true
+- type: drop_action
+  args:
+    name: custom_scalar_nested_array_response
+    clear_data: true
 - type: drop_action
   args:
     name: recursive_output
diff --git a/server/tests-py/test_actions.py b/server/tests-py/test_actions.py
index 30ca9d77afd..f2a40234fd3 100644
--- a/server/tests-py/test_actions.py
+++ b/server/tests-py/test_actions.py
@@ -96,7 +96,7 @@ class TestActionsSync:
 
     def test_expecting_scalar_string_output_type_got_object(self, hge_ctx):
         check_query_secret(hge_ctx, self.dir() + '/expecting_scalar_response_got_object.yaml')
-    
+
     def test_expecting_object_output_type_got_scalar_string(self, hge_ctx):
         check_query_secret(hge_ctx, self.dir() + '/expecting_object_response_got_scalar.yaml')
 
@@ -118,6 +118,34 @@ class TestActionsSync:
 
     def test_expecting_object_response_with_nested_null(self, hge_ctx):
        check_query_f(hge_ctx, self.dir() + '/expecting_object_response_with_nested_null.yaml')
+    
+    def test_expecting_jsonb_response_success(self, hge_ctx):
+       check_query_f(hge_ctx, self.dir() + '/expecting_jsonb_response_success.yaml')
+       
+    def test_expecting_custom_scalar_response_success(self, hge_ctx):
+       check_query_f(hge_ctx, self.dir() + '/expecting_custom_scalar_response_success.yaml')
+    
+    def test_expecting_custom_scalar_array_response_success(self, hge_ctx):
+       check_query_f(hge_ctx, self.dir() + '/expecting_custom_scalar_array_response_success.yaml')
+    
+    def test_expecting_custom_scalar_array_response_got_different_type(self, hge_ctx):
+        query_obj = {
+            "query": """
+                mutation {
+                    custom_scalar_nested_array_response
+                }
+            """
+        }
+        headers = {}
+        admin_secret = hge_ctx.hge_key
+        if admin_secret is not None:
+            headers['X-Hasura-Admin-Secret'] = admin_secret
+        code, resp, _ = hge_ctx.anyq('/v1/graphql', query_obj, headers)
+        assert code == 200, resp
+
+        error_message = resp['errors'][0]['message']
+
+        assert error_message == 'expecting array for the action webhook response', error_message
 
     def test_expecting_object_response_with_nested_null_wrong_field(self, hge_ctx):
         query_obj = {