diff --git a/gradle.properties b/gradle.properties
index 3a59c0dc716a..039ff2bf6050 100644
--- a/gradle.properties
+++ b/gradle.properties
@@ -2,6 +2,6 @@ org.gradle.caching=true
 org.gradle.parallel=true
 org.gradle.jvmargs='-Dfile.encoding=UTF-8'
 org.gradle.workers.max=3
-version=1.2.39
+version=1.2.40-SNAPSHOT
 group=org.ballerinalang
 bootstrappedOn=1.1.0-alpha
diff --git a/tool-plugins/vscode/grammar/ballerina-grammar b/tool-plugins/vscode/grammar/ballerina-grammar
index 7636ea9ad445..0db36d0544a5 160000
--- a/tool-plugins/vscode/grammar/ballerina-grammar
+++ b/tool-plugins/vscode/grammar/ballerina-grammar
@@ -1 +1 @@
-Subproject commit 7636ea9ad445ce62c1a52b1f89ea4ad505f94658
+Subproject commit 0db36d0544a53d13e1f8df021c8bcc793f2499a3