diff --git a/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py b/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
index 0d15bd75ad3..bb1a9b36214 100644
--- a/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
+++ b/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
@@ -282,11 +282,7 @@ class StockReconciliation(StockController):
 			if has_serial_no:
 				sl_entries = self.merge_similar_item_serial_nos(sl_entries)
 
-			allow_negative_stock = False
-			if has_batch_no:
-				allow_negative_stock = True
-
-			self.make_sl_entries(sl_entries, allow_negative_stock=allow_negative_stock)
+			self.make_sl_entries(sl_entries, allow_negative_stock=self.has_negative_stock_allowed())
 
 		if has_serial_no and sl_entries:
 			self.update_valuation_rate_for_serial_no()
@@ -457,10 +453,7 @@ class StockReconciliation(StockController):
 				sl_entries = self.merge_similar_item_serial_nos(sl_entries)
 
 			sl_entries.reverse()
-			allow_negative_stock = cint(
-				frappe.db.get_single_value("Stock Settings", "allow_negative_stock")
-			)
-			self.make_sl_entries(sl_entries, allow_negative_stock=allow_negative_stock)
+			self.make_sl_entries(sl_entries, allow_negative_stock=self.has_negative_stock_allowed())
 
 	def merge_similar_item_serial_nos(self, sl_entries):
 		# If user has put the same item in multiple row with different serial no
@@ -574,6 +567,7 @@ class StockReconciliation(StockController):
 		from erpnext.stock.stock_ledger import get_valuation_rate
 
 		sl_entries = []
+
 		for row in self.items:
 			if voucher_detail_no != row.name:
 				continue
@@ -619,10 +613,18 @@ class StockReconciliation(StockController):
 				sl_entries.append(new_sle)
 
 		if sl_entries:
-			self.make_sl_entries(sl_entries, allow_negative_stock=True)
-			if frappe.db.exists("Repost Item Valuation", {"voucher_no": self.name, "status": "Queued"}):
+			self.make_sl_entries(sl_entries, allow_negative_stock=self.has_negative_stock_allowed())
+			if not frappe.db.exists("Repost Item Valuation", {"voucher_no": self.name, "status": "Queued"}):
 				self.repost_future_sle_and_gle(force=True)
 
+	def has_negative_stock_allowed(self):
+		allow_negative_stock = cint(frappe.db.get_single_value("Stock Settings", "allow_negative_stock"))
+
+		if all(d.batch_no and flt(d.qty) == flt(d.current_qty) for d in self.items):
+			allow_negative_stock = True
+
+		return allow_negative_stock
+
 
 def get_batch_qty_for_stock_reco(
 	item_code, warehouse, batch_no, posting_date, posting_time, voucher_no
diff --git a/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py b/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py
index 1d8b72cec9a..df6777bbe4c 100644
--- a/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py
+++ b/erpnext/stock/doctype/stock_reconciliation/test_stock_reconciliation.py
@@ -769,8 +769,6 @@ class TestStockReconciliation(FrappeTestCase, StockTestMixin):
 		self.assertEqual(flt(sle[0].qty_after_transaction), flt(50.0))
 
 	def test_backdated_stock_reco_entry_with_batch(self):
-		from erpnext.stock.doctype.stock_entry.test_stock_entry import make_stock_entry
-
 		item_code = self.make_item(
 			"Test New Batch Item ABCVSD",
 			{
@@ -868,6 +866,56 @@ class TestStockReconciliation(FrappeTestCase, StockTestMixin):
 		sr1.load_from_db()
 		self.assertEqual(sr1.difference_amount, 10000)
 
+	@change_settings("Stock Settings", {"allow_negative_stock": 0})
+	def test_negative_stock_reco_for_batch(self):
+		from erpnext.stock.doctype.stock_entry.test_stock_entry import make_stock_entry
+
+		item_code = self.make_item(
+			"Test New Batch Item ABCVSD",
+			{
+				"is_stock_item": 1,
+				"has_batch_no": 1,
+				"batch_number_series": "BNS9.####",
+				"create_new_batch": 1,
+			},
+		).name
+
+		warehouse = "_Test Warehouse - _TC"
+
+		# Added 100 Qty, Balace Qty 100
+		se = make_stock_entry(
+			item_code=item_code,
+			target=warehouse,
+			qty=100,
+			basic_rate=100,
+			posting_date=add_days(nowdate(), -2),
+		)
+
+		# Removed 100 Qty, Balace Qty 0
+		make_stock_entry(
+			item_code=item_code,
+			source=warehouse,
+			qty=100,
+			batch_no=se.items[0].batch_no,
+			basic_rate=100,
+			posting_date=nowdate(),
+		)
+
+		# Remove 100 qty, Balace Qty -100
+		sr = create_stock_reconciliation(
+			item_code=item_code,
+			warehouse=warehouse,
+			qty=0,
+			rate=0,
+			batch_no=se.items[0].batch_no,
+			posting_date=add_days(nowdate(), -1),
+			posting_time="11:00:00",
+			do_not_submit=True,
+		)
+
+		# Check if Negative Stock is blocked
+		self.assertRaises(frappe.ValidationError, sr.submit)
+
 
 def create_batch_item_with_batch(item_name, batch_id):
 	batch_item_doc = create_item(item_name, is_stock_item=1)
@@ -891,7 +939,7 @@ def insert_existing_sle(warehouse, item_code="_Test Item"):
 		posting_time="02:00",
 		item_code=item_code,
 		target=warehouse,
-		qty=10,
+		qty=15,
 		basic_rate=700,
 	)
 
diff --git a/erpnext/stock/stock_ledger.py b/erpnext/stock/stock_ledger.py
index 0c3056cc705..d8284af6047 100644
--- a/erpnext/stock/stock_ledger.py
+++ b/erpnext/stock/stock_ledger.py
@@ -635,7 +635,7 @@ class update_entries_after(object):
 
 	def reset_actual_qty_for_stock_reco(self, sle):
 		doc = frappe.get_cached_doc("Stock Reconciliation", sle.voucher_no)
-		doc.recalculate_current_qty(sle.voucher_detail_no, sle.creation, sle.actual_qty > 0)
+		doc.recalculate_current_qty(sle.voucher_detail_no, sle.creation, sle.actual_qty >= 0)
 
 		if sle.actual_qty < 0:
 			sle.actual_qty = (
@@ -643,9 +643,6 @@ class update_entries_after(object):
 				* -1
 			)
 
-			if abs(sle.actual_qty) == 0.0:
-				sle.is_cancelled = 1
-
 	def validate_negative_stock(self, sle):
 		"""
 		validate negative stock for entries current datetime onwards