diff --git a/erpnext/buying/doctype/buying_settings/buying_settings.json b/erpnext/buying/doctype/buying_settings/buying_settings.json
index 630a1dc..b9c77d5 100644
--- a/erpnext/buying/doctype/buying_settings/buying_settings.json
+++ b/erpnext/buying/doctype/buying_settings/buying_settings.json
@@ -9,13 +9,14 @@
   "supp_master_name",
   "supplier_group",
   "buying_price_list",
+  "maintain_same_rate_action",
+  "role_to_override_stop_action",
   "column_break_3",
   "po_required",
   "pr_required",
   "maintain_same_rate",
-  "maintain_same_rate_action",
-  "role_to_override_stop_action",
   "allow_multiple_items",
+  "bill_for_rejected_quantity_in_purchase_invoice",
   "subcontract",
   "backflush_raw_materials_of_subcontract_based_on",
   "column_break_11",
@@ -108,6 +109,13 @@
    "fieldtype": "Link",
    "label": "Role Allowed to Override Stop Action",
    "options": "Role"
+  },
+  {
+   "default": "1",
+   "description": "If checked, Rejected Quantity will be included while making Purchase Invoice from Purchase Receipt.",
+   "fieldname": "bill_for_rejected_quantity_in_purchase_invoice",
+   "fieldtype": "Check",
+   "label": "Bill for Rejected Quantity in Purchase Invoice"
   }
  ],
  "icon": "fa fa-cog",
@@ -115,7 +123,7 @@
  "index_web_pages_for_search": 1,
  "issingle": 1,
  "links": [],
- "modified": "2021-04-04 20:01:44.087066",
+ "modified": "2021-06-24 10:38:28.934525",
  "modified_by": "Administrator",
  "module": "Buying",
  "name": "Buying Settings",
diff --git a/erpnext/controllers/accounts_controller.py b/erpnext/controllers/accounts_controller.py
index 243939b..1c086e9 100644
--- a/erpnext/controllers/accounts_controller.py
+++ b/erpnext/controllers/accounts_controller.py
@@ -828,8 +828,14 @@
 					role_allowed_to_over_bill = frappe.db.get_single_value('Accounts Settings', 'role_allowed_to_over_bill')
 
 					if total_billed_amt - max_allowed_amt > 0.01 and role_allowed_to_over_bill not in frappe.get_roles():
-						frappe.throw(_("Cannot overbill for Item {0} in row {1} more than {2}. To allow over-billing, please set allowance in Accounts Settings")
-							.format(item.item_code, item.idx, max_allowed_amt))
+						if self.doctype != "Purchase Invoice":
+							self.throw_overbill_exception(item, max_allowed_amt)
+						elif not cint(frappe.db.get_single_value("Buying Settings", "bill_for_rejected_quantity_in_purchase_invoice")):
+							self.throw_overbill_exception(item, max_allowed_amt)
+
+	def throw_overbill_exception(self, item, max_allowed_amt):
+		frappe.throw(_("Cannot overbill for Item {0} in row {1} more than {2}. To allow over-billing, please set allowance in Accounts Settings")
+			.format(item.item_code, item.idx, max_allowed_amt))
 
 	def get_company_default(self, fieldname):
 		from erpnext.accounts.utils import get_company_default
diff --git a/erpnext/patches.txt b/erpnext/patches.txt
index ed6fefd..dd0e33b 100644
--- a/erpnext/patches.txt
+++ b/erpnext/patches.txt
@@ -288,3 +288,4 @@
 erpnext.patches.v13_0.update_timesheet_changes
 erpnext.patches.v13_0.set_training_event_attendance
 erpnext.patches.v13_0.rename_issue_status_hold_to_on_hold
+erpnext.patches.v13_0.bill_for_rejected_quantity_in_purchase_invoice
\ No newline at end of file
diff --git a/erpnext/patches/v13_0/bill_for_rejected_quantity_in_purchase_invoice.py b/erpnext/patches/v13_0/bill_for_rejected_quantity_in_purchase_invoice.py
new file mode 100644
index 0000000..be85cfd
--- /dev/null
+++ b/erpnext/patches/v13_0/bill_for_rejected_quantity_in_purchase_invoice.py
@@ -0,0 +1,8 @@
+from __future__ import unicode_literals
+import frappe
+
+def execute():
+	frappe.reload_doctype("Buying Settings")
+	buying_settings = frappe.get_single("Buying Settings")
+	buying_settings.bill_for_rejected_quantity_in_purchase_invoice = 0
+	buying_settings.save()
\ No newline at end of file
diff --git a/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py b/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py
index b8580f9..e488b69 100644
--- a/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py
+++ b/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py
@@ -581,7 +581,6 @@
 
 @frappe.whitelist()
 def make_purchase_invoice(source_name, target_doc=None):
-	from frappe.model.mapper import get_mapped_doc
 	from erpnext.accounts.party import get_payment_terms_template
 
 	doc = frappe.get_doc('Purchase Receipt', source_name)
@@ -601,11 +600,16 @@
 
 	def update_item(source_doc, target_doc, source_parent):
 		target_doc.qty, returned_qty = get_pending_qty(source_doc)
+		if frappe.db.get_single_value("Buying Settings", "bill_for_rejected_quantity_in_purchase_invoice"):
+			target_doc.rejected_qty = 0
 		target_doc.stock_qty = flt(target_doc.qty) * flt(target_doc.conversion_factor, target_doc.precision("conversion_factor"))
 		returned_qty_map[source_doc.name] = returned_qty
 
 	def get_pending_qty(item_row):
-		pending_qty = item_row.qty - invoiced_qty_map.get(item_row.name, 0)
+		qty = item_row.qty
+		if frappe.db.get_single_value("Buying Settings", "bill_for_rejected_quantity_in_purchase_invoice"):
+			qty = item_row.received_qty
+		pending_qty = qty - invoiced_qty_map.get(item_row.name, 0)
 		returned_qty = flt(returned_qty_map.get(item_row.name, 0))
 		if returned_qty:
 			if returned_qty >= pending_qty:
diff --git a/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py b/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
index 95096d7..07c5da1 100644
--- a/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
+++ b/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
@@ -421,11 +421,18 @@
 		self.assertEqual(return_pr_2.items[0].qty, -3)
 
 		# Make PI against unreturned amount
+		buying_settings = frappe.get_single("Buying Settings")
+		buying_settings.bill_for_rejected_quantity_in_purchase_invoice = 0
+		buying_settings.save()
+
 		pi = make_purchase_invoice(pr.name)
 		pi.submit()
 
 		self.assertEqual(pi.items[0].qty, 3)
 
+		buying_settings.bill_for_rejected_quantity_in_purchase_invoice = 1
+		buying_settings.save()
+
 		pr.load_from_db()
 		# PR should be completed on billing all unreturned amount
 		self.assertEqual(pr.items[0].billed_amt, 150)