Unexpected LAMBDA_RUNTIME Failed to post handler success response. Http response code: 413 error

So I have a serverless express application running in a Lambda. One request (response size around 800KB) keeps returning a LAMBDA_RUNTIME Failed to post handler success response. Http response code: 413. error.
I thought it could be due to some internal logic timing out, and added logs, and all the fetch and processing takes maximum 6 seconds, but the lamdba still returns this error.

These are the response headers

x-amz-cf-pop: YTO50-C3
x-amzn-errortype: InternalServerErrorException
x-amzn-requestid: f291230-342-4324-324-cb7df188944c
x-cache: Error from cloudfront

The response size is definitely not too big, I am returning a response with right data, no errors are being thrown in the logs. Any idea why this could be happening? Also any suggestions on how I can debug this issue? Everything of course works in local, but is there a way for me debug the actual lambda? The logs I added indicate that the full process completes, yet somehow there is an error being returned.

Updated my serverless.yml config

service: my-service
variablesResolutionMode: 20210326
useDotenv: true

custom:
  serverless-offline:
    useChildProcesses: true
  webpack:
    webpackConfig: ./webpack.config.js
    packager: "yarn"
    includeModules: true
  prune:
    automatic: true
    includeLayers: true
    number: 3
  customDomain:
    domainName: "abc.com"
    basePath: "val"
    stage: ${someval}
    createRoute53Record: true

plugins:
  - serverless-domain-manager
  - serverless-webpack
  - serverless-prune-plugin
  - serverless-webpack-prisma
  - serverless-offline

provider:
  lambdaHashingVersion: "20201221"
  name: aws
  runtime: nodejs14.x
  region: us-east-1
  timeout: 30
  apiGateway:
    minimumCompressionSize: 1024 
  iamRoleStatements:
    - Effect: Allow
      Action: ssm:Get*
      Resource:
        - "abc/${opt:stage}/backend/*"
        - "abc/${opt:stage}/services/*"
    - Effect: Allow
      Action: kms:Decrypt
      Resource: "*"
    - Effect: "Allow"
      Action: s3:PutObject
      Resource: "abc/*"
    - Effect: "Allow"
      Action:
        - sns:Publish
      Resource: "*"

  environment:
    - myvars: 'abc'

functions:
  graphql:
    handler: src/index.graphqlHandler
    events:
      - https:
          path: /graphql
          method: options
      - https:
          path: /graphql
          method: get
      - https:
          path: /graphql
          method: post