Horn noise affects RPM data
Is it because, the hall effect sensor works on magnetic field and the horn is an inductor which generates a huge amount of magnetic field?


Possible. However you say the problem also occurs with the indicators, which should not produce large magnetic fields.

First suspect would be the wiring to your RPM hall effect sensor. Make sure it is shielded, use a stronger pullup, and of course a small filter capacitor at the receiving end to kill HF noise spikes.

Since your hall sensor is powered, a small decoupling capacitor right next to it could help.

It would be a good idea to post scope waveforms from the output of the sensor when the problem occurs.

I presume you don't have any ground loops in your wiring, which might force currents through your pcb?