diff --git a/erpnext/loan_management/doctype/loan_refund/__init__.py b/erpnext/loan_management/doctype/loan_refund/__init__.py
new file mode 100644
index 0000000..e69de29
--- /dev/null
+++ b/erpnext/loan_management/doctype/loan_refund/__init__.py
diff --git a/erpnext/loan_management/doctype/loan_refund/loan_refund.js b/erpnext/loan_management/doctype/loan_refund/loan_refund.js
new file mode 100644
index 0000000..f108bf7
--- /dev/null
+++ b/erpnext/loan_management/doctype/loan_refund/loan_refund.js
@@ -0,0 +1,8 @@
+// Copyright (c) 2022, Frappe Technologies Pvt. Ltd. and contributors
+// For license information, please see license.txt
+
+frappe.ui.form.on('Loan Refund', {
+	// refresh: function(frm) {
+
+	// }
+});
diff --git a/erpnext/loan_management/doctype/loan_refund/loan_refund.json b/erpnext/loan_management/doctype/loan_refund/loan_refund.json
new file mode 100644
index 0000000..f78e55e
--- /dev/null
+++ b/erpnext/loan_management/doctype/loan_refund/loan_refund.json
@@ -0,0 +1,176 @@
+{
+ "actions": [],
+ "autoname": "LM-RF-.#####",
+ "creation": "2022-06-24 15:51:03.165498",
+ "doctype": "DocType",
+ "editable_grid": 1,
+ "engine": "InnoDB",
+ "field_order": [
+  "loan",
+  "applicant_type",
+  "applicant",
+  "column_break_3",
+  "company",
+  "posting_date",
+  "accounting_dimensions_section",
+  "cost_center",
+  "section_break_9",
+  "refund_account",
+  "column_break_11",
+  "refund_amount",
+  "reference_number",
+  "amended_from"
+ ],
+ "fields": [
+  {
+   "fieldname": "loan",
+   "fieldtype": "Link",
+   "in_list_view": 1,
+   "label": "Loan",
+   "options": "Loan",
+   "reqd": 1
+  },
+  {
+   "fetch_from": "loan.applicant_type",
+   "fieldname": "applicant_type",
+   "fieldtype": "Select",
+   "label": "Applicant Type",
+   "options": "Employee\nMember\nCustomer",
+   "read_only": 1
+  },
+  {
+   "fetch_from": "loan.applicant",
+   "fieldname": "applicant",
+   "fieldtype": "Dynamic Link",
+   "label": "Applicant ",
+   "options": "applicant_type",
+   "read_only": 1
+  },
+  {
+   "fieldname": "column_break_3",
+   "fieldtype": "Column Break"
+  },
+  {
+   "fetch_from": "loan.company",
+   "fieldname": "company",
+   "fieldtype": "Link",
+   "in_list_view": 1,
+   "label": "Company",
+   "options": "Company",
+   "read_only": 1,
+   "reqd": 1
+  },
+  {
+   "default": "Today",
+   "fieldname": "posting_date",
+   "fieldtype": "Date",
+   "in_list_view": 1,
+   "label": "Posting Date",
+   "reqd": 1
+  },
+  {
+   "collapsible": 1,
+   "fieldname": "accounting_dimensions_section",
+   "fieldtype": "Section Break",
+   "label": "Accounting Dimensions"
+  },
+  {
+   "fieldname": "cost_center",
+   "fieldtype": "Link",
+   "label": "Cost Center",
+   "options": "Cost Center"
+  },
+  {
+   "fieldname": "section_break_9",
+   "fieldtype": "Section Break",
+   "label": "Refund Details"
+  },
+  {
+   "fieldname": "refund_account",
+   "fieldtype": "Link",
+   "in_list_view": 1,
+   "label": "Refund Account",
+   "options": "Account",
+   "reqd": 1
+  },
+  {
+   "fieldname": "column_break_11",
+   "fieldtype": "Column Break"
+  },
+  {
+   "fieldname": "refund_amount",
+   "fieldtype": "Currency",
+   "label": "Refund Amount",
+   "options": "Company:company:default_currency",
+   "reqd": 1
+  },
+  {
+   "fieldname": "amended_from",
+   "fieldtype": "Link",
+   "label": "Amended From",
+   "no_copy": 1,
+   "options": "Loan Refund",
+   "print_hide": 1,
+   "read_only": 1
+  },
+  {
+   "fieldname": "amended_from",
+   "fieldtype": "Link",
+   "label": "Amended From",
+   "no_copy": 1,
+   "options": "Loan Refund",
+   "print_hide": 1,
+   "read_only": 1
+  },
+  {
+   "fieldname": "reference_number",
+   "fieldtype": "Data",
+   "label": "Reference Number"
+  }
+ ],
+ "index_web_pages_for_search": 1,
+ "is_submittable": 1,
+ "links": [],
+ "modified": "2022-06-24 16:13:48.793486",
+ "modified_by": "Administrator",
+ "module": "Loan Management",
+ "name": "Loan Refund",
+ "naming_rule": "Expression (old style)",
+ "owner": "Administrator",
+ "permissions": [
+  {
+   "amend": 1,
+   "cancel": 1,
+   "create": 1,
+   "delete": 1,
+   "email": 1,
+   "export": 1,
+   "print": 1,
+   "read": 1,
+   "report": 1,
+   "role": "System Manager",
+   "share": 1,
+   "submit": 1,
+   "write": 1
+  },
+  {
+   "amend": 1,
+   "cancel": 1,
+   "create": 1,
+   "delete": 1,
+   "email": 1,
+   "export": 1,
+   "print": 1,
+   "read": 1,
+   "report": 1,
+   "role": "Loan Manager",
+   "share": 1,
+   "submit": 1,
+   "write": 1
+  }
+ ],
+ "sort_field": "modified",
+ "sort_order": "DESC",
+ "states": [],
+ "track_changes": 1
+}
\ No newline at end of file
diff --git a/erpnext/loan_management/doctype/loan_refund/loan_refund.py b/erpnext/loan_management/doctype/loan_refund/loan_refund.py
new file mode 100644
index 0000000..2a7f478
--- /dev/null
+++ b/erpnext/loan_management/doctype/loan_refund/loan_refund.py
@@ -0,0 +1,95 @@
+# Copyright (c) 2022, Frappe Technologies Pvt. Ltd. and contributors
+# For license information, please see license.txt
+
+# import frappe
+from frappe.model.document import Document
+
+class LoanRefund(Document):
+	"""
+	Add refund if total repayment is more than that is owed.
+	"""
+	def validate(self):
+		self.set_missing_values()
+		self.validate_refund_amount()
+
+	def set_missing_values(self):
+		if not self.cost_center:
+			self.cost_center = erpnext.get_default_cost_center(self.company)
+
+	def validate_refund_amount(self):
+		precision = cint(frappe.db.get_default("currency_precision")) or 2
+		total_payment, principal_paid, interest_payable, written_off_amount = frappe.get_value(
+			"Loan",
+			self.loan,
+			["total_payment", "total_principal_paid", "total_interest_payable", "written_off_amount"],
+		)
+
+		excess_amount = flt(
+			flt(total_payment) - flt(interest_payable) - flt(principal_paid) - flt(written_off_amount),
+			precision,
+		)
+
+		if self.refund_amount > excess_amount:
+			frappe.throw(_(
+				"Refund amount cannot be greater than excess amount {}".format(
+					excess_amount
+			)))
+
+	def on_submit(self):
+		self.update_outstanding_amount()
+		self.make_gl_entries()
+
+	def on_cancel(self):
+		self.update_outstanding_amount(cancel=1)
+		self.ignore_linked_doctypes = ["GL Entry"]
+		self.make_gl_entries(cancel=1)
+
+	def update_outstanding_amount(self, cancel=0):
+		refund_amount = frappe.db.get_value("Loan", self.loan, "refund_amount")
+
+		if cancel:
+			refund_amount -= self.refund_amount
+		else:
+			refund_amount += self.refund_amount
+
+		frappe.db.set_value("Loan", self.loan, "refund_amount", refund_amount)
+
+	def make_gl_entries(self, cancel=0):
+		gl_entries = []
+		loan_details = frappe.get_doc("Loan", self.loan)
+
+		gl_entries.append(
+			self.get_gl_dict(
+				{
+					"account": self.refund_account,
+					"against": loan_details.loan_account,
+					"credit": self.refund_amount,
+					"credit_in_account_currency": self.refund_amount,
+					"against_voucher_type": "Loan",
+					"against_voucher": self.loan,
+					"remarks": _("Against Loan:") + self.loan,
+					"cost_center": self.cost_center,
+					"posting_date": getdate(self.posting_date),
+				}
+			)
+		)
+
+		gl_entries.append(
+			self.get_gl_dict(
+				{
+					"account": loan_details.loan_account,
+					"party_type": loan_details.applicant_type,
+					"party": loan_details.applicant,
+					"against": self.refund_account,
+					"debit": self.refund_amount,
+					"debit_in_account_currency": self.refund_amount,
+					"against_voucher_type": "Loan",
+					"against_voucher": self.loan,
+					"remarks": _("Against Loan:") + self.loan,
+					"cost_center": self.cost_center,
+					"posting_date": getdate(self.posting_date),
+				}
+			)
+		)
+
+		make_gl_entries(gl_entries, cancel=cancel, merge_entries=False)
diff --git a/erpnext/loan_management/doctype/loan_refund/test_loan_refund.py b/erpnext/loan_management/doctype/loan_refund/test_loan_refund.py
new file mode 100644
index 0000000..de2f9e1
--- /dev/null
+++ b/erpnext/loan_management/doctype/loan_refund/test_loan_refund.py
@@ -0,0 +1,9 @@
+# Copyright (c) 2022, Frappe Technologies Pvt. Ltd. and Contributors
+# See license.txt
+
+# import frappe
+from frappe.tests.utils import FrappeTestCase
+
+
+class TestLoanRefund(FrappeTestCase):
+	pass