Will leaving a company in short period due to toxic work environment make challenges to find a new job ?

If you say you quit because of toxic environment. Then yes.

It's a 3 month exp, remove it from your resume. Throw some Regular BS, had a startup idea, went on a road trip to leh/Ladakh, if youvare married, say you got married and went on honey moon, or even the new rmal BS like wanted to upskill and learnt something new.

Speak truth - you got only one truth , tella lie you got a whole menu of choices.

Moreover, which company tells you the truth?.. why do you wish to be honest?

Yes.