i have download and installed the Xcode 12.4 from apple site (not apple store) because I am using macOS Catalina 10.15.7 and the latest Xcode version right now requires at-least BigSur 11.0. I have also installed the latest Xcode command line tools.

But when i try to open my react native project in Xcode simulator from terminal using npm run ios it says,
"Xcode needs to be installed (don't worry, you won't have to use it), would you like to continue to the App Store? › (Y/n)"

By the way, I am a new mac user so, i don't know much about it yet. So, any kind of help will be appreciated.
My bad, i have not selected the installed command line tools in Xcode. If anybody got this issue then make sure you also select the installed command line tools. Simply open Xcode, go to preference -> locations -> command line tools.
If you're having this issue, running the command below in the terminal will also fix it for you.
sudo xcode-select -s /Applications/Xcode.app
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