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In modern power systems due to prolific use of non-linear devices harmonics are present in the distribution system. To reduce the harmonics and source neutral current D-FACT along with a star-delta transformer and Power Filter is proposed in shunt. In this article, the three phase load has been taken from NTS Industries, which deals with FMCG products. This system includes 3 phase 3 wire system having industrial load such as mixer grinder, pulverizer, packaging machine, etc. A star-delta transformer along with three leg voltage source inverter and a capacitor used to filter out harmonics present in supply current. Power balance theory is used to control the D-FACT. A MATLAB Simulink model was created and the results were discussed.