After a clean install, while upgrading to Garuda Ultimate, I selected only Printer, Scanner and Samba Support (for everything else I hit No and Cancel). After upgrading, I restarted and figured out that this turned into this ->
Also, even in Kate I was able to see emojis, but not after this.
As I have Timeshift, no worries. After trying each option with Yes in Garuda Setup Assistant, I finally figured out that this happened with Printer, Scanner and Samba Support only.
Edit: It's not only with Printer, Scanner and Samba Support. Even without it the problem occurs when upgrading to ultimate.