diff --git a/CHANGELOG.md b/CHANGELOG.md
index 9e17643146d1..c36c6b714b46 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -192,6 +192,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 * [#10763](https://github.com/cosmos/cosmos-sdk/pull/10763) modify the fields in `TallyParams` to use `string` instead of `bytes`
 * [#10770](https://github.com/cosmos/cosmos-sdk/pull/10770) revert tx when block gas limit exceeded
 * [\#10868](https://github.com/cosmos/cosmos-sdk/pull/10868) Bump gov to v1beta2. Both v1beta1 and v1beta2 queries and Msgs are accepted.
+* [\#11011](https://github.com/cosmos/cosmos-sdk/pull/11011) Remove burning of deposits when qourum is not reached on a governance proposal and when the deposit is not fully met. 
 
 ### Deprecated
 
diff --git a/x/gov/abci.go b/x/gov/abci.go
index 36fea6f2c0e9..5876358ef493 100644
--- a/x/gov/abci.go
+++ b/x/gov/abci.go
@@ -17,10 +17,10 @@ func EndBlocker(ctx sdk.Context, keeper keeper.Keeper) {
 
 	logger := keeper.Logger(ctx)
 
-	// delete dead proposals from store and burn theirs deposits. A proposal is dead when it's inactive and didn't get enough deposit on time to get into voting phase.
+	// delete dead proposals from store and returns theirs deposits. A proposal is dead when it's inactive and didn't get enough deposit on time to get into voting phase.
 	keeper.IterateInactiveProposalsQueue(ctx, ctx.BlockHeader().Time, func(proposal v1beta2.Proposal) bool {
 		keeper.DeleteProposal(ctx, proposal.ProposalId)
-		keeper.DeleteAndBurnDeposits(ctx, proposal.ProposalId)
+		keeper.RefundAndDeleteDeposits(ctx, proposal.ProposalId) // refund deposit if proposal got removed without getting 100% of the proposal
 
 		// called when proposal become inactive
 		keeper.AfterProposalFailedMinDeposit(ctx, proposal.ProposalId)
diff --git a/x/gov/keeper/tally.go b/x/gov/keeper/tally.go
index 2cabec0cf5bc..470af87088ba 100644
--- a/x/gov/keeper/tally.go
+++ b/x/gov/keeper/tally.go
@@ -105,7 +105,7 @@ func (keeper Keeper) Tally(ctx sdk.Context, proposal v1beta2.Proposal) (passes b
 	percentVoting := totalVotingPower.Quo(keeper.sk.TotalBondedTokens(ctx).ToDec())
 	quorum, _ := sdk.NewDecFromStr(tallyParams.Quorum)
 	if percentVoting.LT(quorum) {
-		return false, true, tallyResults
+		return false, false, tallyResults
 	}
 
 	// If no one votes (everyone abstains), proposal fails
diff --git a/x/gov/keeper/tally_test.go b/x/gov/keeper/tally_test.go
index 2f9d48618f88..a7e3176e18ea 100644
--- a/x/gov/keeper/tally_test.go
+++ b/x/gov/keeper/tally_test.go
@@ -31,7 +31,7 @@ func TestTallyNoOneVotes(t *testing.T) {
 	passes, burnDeposits, tallyResults := app.GovKeeper.Tally(ctx, proposal)
 
 	require.False(t, passes)
-	require.True(t, burnDeposits)
+	require.False(t, burnDeposits)
 	require.True(t, tallyResults.Equals(v1beta2.EmptyTallyResult()))
 }
 
@@ -57,7 +57,7 @@ func TestTallyNoQuorum(t *testing.T) {
 	require.True(t, ok)
 	passes, burnDeposits, _ := app.GovKeeper.Tally(ctx, proposal)
 	require.False(t, passes)
-	require.True(t, burnDeposits)
+	require.False(t, burnDeposits)
 }
 
 func TestTallyOnlyValidatorsAllYes(t *testing.T) {