Hi @Dhishyanth.
You can delete the vm and recreate in a different availability set. You can use the following powershell code:
# Set variables
    $resourceGroup = "myResourceGroup"
    $vmName = "myVM"
    $newAvailSetName = "myAvailabilitySet"
# Get the details of the VM to be moved to the Availability Set
    $originalVM = Get-AzVM `
   -ResourceGroupName $resourceGroup `
   -Name $vmName
# Create new availability set if it does not exist
    $availSet = Get-AzAvailabilitySet `
   -ResourceGroupName $resourceGroup `
   -Name $newAvailSetName `
   -ErrorAction Ignore
    if (-Not $availSet) {
    $availSet = New-AzAvailabilitySet `
   -Location $originalVM.Location `
   -Name $newAvailSetName `
   -ResourceGroupName $resourceGroup `
   -PlatformFaultDomainCount 2 `
   -PlatformUpdateDomainCount 2 `
   -Sku Aligned
    }
    
# Remove the original VM
    Remove-AzVM -ResourceGroupName $resourceGroup -Name $vmName    
# Create the basic configuration for the replacement VM
    $newVM = New-AzVMConfig `
   -VMName $originalVM.Name `
   -VMSize $originalVM.HardwareProfile.VmSize `
   -AvailabilitySetId $availSet.Id
    Set-AzVMOSDisk `
   -VM $newVM -CreateOption Attach `
   -ManagedDiskId $originalVM.StorageProfile.OsDisk.ManagedDisk.Id `
   -Name $originalVM.StorageProfile.OsDisk.Name `
   -Windows
# Add Data Disks
    foreach ($disk in $originalVM.StorageProfile.DataDisks) { 
    Add-AzVMDataDisk -VM $newVM `
   -Name $disk.Name `
   -ManagedDiskId $disk.ManagedDisk.Id `
   -Caching $disk.Caching `
   -Lun $disk.Lun `
   -DiskSizeInGB $disk.DiskSizeGB `
   -CreateOption Attach
    }
    
# Add NIC(s) and keep the same NIC as primary
foreach ($nic in $originalVM.NetworkProfile.NetworkInterfaces) {
if ($nic.Primary -eq "True")
{
    Add-AzVMNetworkInterface `
        -VM $newVM `
        -Id $nic.Id -Primary
        }
        else
        {
          Add-AzVMNetworkInterface `
        -VM $newVM `
        -Id $nic.Id 
                }
  }
 #Recreate the VM
    New-AzVM `
   -ResourceGroupName $resourceGroup `
   -Location $originalVM.Location `
  -VM $newVM `
   -DisableBginfoExtension
Hope this helps!!
If you need to know more about Azure, enroll with Microsoft Azure training course today.
Thank you!!