diff --git a/.changelog/unreleased/bug-fixes/4938-fix-refund-limit.md b/.changelog/unreleased/bug-fixes/4938-fix-refund-limit.md
new file mode 100644
index 00000000000..5ad893baab7
--- /dev/null
+++ b/.changelog/unreleased/bug-fixes/4938-fix-refund-limit.md
@@ -0,0 +1,2 @@
+- Fix to enable the refund without per-epoch limit
+  ([\#4938](https://github.com/namada-net/namada/issues/4938))
\ No newline at end of file
diff --git a/crates/ibc/src/context/token_transfer.rs b/crates/ibc/src/context/token_transfer.rs
index 1f273c84866..d4d4b898584 100644
--- a/crates/ibc/src/context/token_transfer.rs
+++ b/crates/ibc/src/context/token_transfer.rs
@@ -27,6 +27,7 @@ where
     pub(crate) inner: Rc<RefCell<C>>,
     pub(crate) verifiers: Rc<RefCell<BTreeSet<Address>>>,
     is_shielded: bool,
+    is_refund: bool,
 }
 
 impl<C> TokenTransferContext<C>
@@ -42,6 +43,7 @@ where
             inner,
             verifiers,
             is_shielded: false,
+            is_refund: false,
         }
     }
 
@@ -55,6 +57,11 @@ where
         self.is_shielded = true;
     }
 
+    /// Set the transfer as refund
+    pub fn enable_refund_transfer(&mut self) {
+        self.is_refund = true;
+    }
+
     fn validate_sent_coin(&self, coin: &PrefixedCoin) -> Result<(), HostError> {
         // The base denom should not be an IBC token address because an IBC
         // token address has been already encoded and other chains can't extract
@@ -312,7 +319,9 @@ where
     ) -> Result<(), HostError> {
         let (ibc_token, amount) = self.get_token_amount(coin)?;
 
-        self.add_deposit(&ibc_token, amount)?;
+        if !self.is_refund {
+            self.add_deposit(&ibc_token, amount)?;
+        }
 
         self.inner
             .borrow_mut()
@@ -329,7 +338,9 @@ where
         let (ibc_token, amount) = self.get_token_amount(coin)?;
 
         self.update_mint_amount(&ibc_token, amount, true)?;
-        self.add_deposit(&ibc_token, amount)?;
+        if !self.is_refund {
+            self.add_deposit(&ibc_token, amount)?;
+        }
 
         // A transfer of NUT tokens must be verified by their VP
         if ibc_token.is_internal()
diff --git a/crates/ibc/src/context/transfer_mod.rs b/crates/ibc/src/context/transfer_mod.rs
index 03c81e5353f..a84b61335d0 100644
--- a/crates/ibc/src/context/transfer_mod.rs
+++ b/crates/ibc/src/context/transfer_mod.rs
@@ -302,6 +302,7 @@ where
         acknowledgement: &Acknowledgement,
         relayer: &Signer,
     ) -> (ModuleExtras, Result<(), ChannelError>) {
+        self.ctx.enable_refund_transfer();
         let (extras, result) = on_acknowledgement_packet_execute(
             &mut self.ctx,
             packet,
@@ -325,6 +326,7 @@ where
         packet: &Packet,
         relayer: &Signer,
     ) -> (ModuleExtras, Result<(), ChannelError>) {
+        self.ctx.enable_refund_transfer();
         let (extras, result) =
             on_timeout_packet_execute(&mut self.ctx, packet, relayer);
         (extras, result.map_err(into_channel_error))
diff --git a/crates/ibc/src/vp/mod.rs b/crates/ibc/src/vp/mod.rs
index 81e0baa9e98..009376818cb 100644
--- a/crates/ibc/src/vp/mod.rs
+++ b/crates/ibc/src/vp/mod.rs
@@ -2909,16 +2909,8 @@ mod tests {
             .delete(&commitment_key)
             .expect("delete failed");
         keys_changed.insert(commitment_key);
-        // deposit
         let data = serde_json::from_slice::<PacketData>(&packet.data)
             .expect("decoding packet data failed");
-        let deposit_key = deposit_key(&nam());
-        let bytes = amount.serialize_to_vec();
-        let _ = state
-            .write_log_mut()
-            .write(&deposit_key, bytes)
-            .expect("write failed");
-        keys_changed.insert(deposit_key);
         // event
         let timeout_event = TimeoutEvent {
             refund_receiver: data.sender,
@@ -3068,16 +3060,8 @@ mod tests {
             .delete(&commitment_key)
             .expect("delete failed");
         keys_changed.insert(commitment_key);
-        // deposit
         let data = serde_json::from_slice::<PacketData>(&packet.data)
             .expect("decoding packet data failed");
-        let deposit_key = deposit_key(&nam());
-        let bytes = amount.serialize_to_vec();
-        let _ = state
-            .write_log_mut()
-            .write(&deposit_key, bytes)
-            .expect("write failed");
-        keys_changed.insert(deposit_key);
         // event
         let timeout_event = TimeoutEvent {
             refund_receiver: data.sender,
diff --git a/crates/tests/src/e2e/ibc_tests.rs b/crates/tests/src/e2e/ibc_tests.rs
index 2e5873b4dd6..71674f2e647 100644
--- a/crates/tests/src/e2e/ibc_tests.rs
+++ b/crates/tests/src/e2e/ibc_tests.rs
@@ -1073,6 +1073,7 @@ fn ibc_upgrade_client() -> Result<()> {
 ///   - Transfer 1 NAM in an epoch will succeed
 ///   - Transfer 1 NAM in the same epoch will fail
 ///   - Transfer 1 NAM in the next epoch will succeed
+///   - Refund will succeed after sending 1 NAM
 /// 2. Test the mint limit
 ///   - The mint limit is 1
 ///   - Receiving 2 samoleans from Gaia will fail
@@ -1233,6 +1234,33 @@ fn ibc_rate_limit() -> Result<()> {
         epoch = get_epoch(&test, &rpc).unwrap();
     }
 
+    // Send 1 Apfel from Namada to an invalid Gaia address to trigger a refund
+    transfer(
+        &test,
+        ALBERT,
+        "invalid_receiver",
+        APFEL,
+        1,
+        Some(ALBERT_KEY),
+        &port_id_namada,
+        &channel_id_namada,
+        None,
+        None,
+        None,
+        None,
+        false,
+        None,
+        None,
+    )?;
+    // the per-epoch limit has reached but the refund should succeed
+    wait_for_packet_relay(
+        &hermes_dir,
+        &port_id_namada,
+        &channel_id_namada,
+        &test,
+    )?;
+    check_balance(&test, ALBERT, APFEL, 1_000_000)?;
+
     // Transfer 2 samoleans from Gaia to Namada will succeed, but Namada can't
     // receive due to the mint limit and the packet will be timed out
     let namada_receiver = find_address(&test, ALBERT)?.to_string();