The non-linearity in loads is common nowadays in almost all industries, residences, and commercial applications due to power electronics converters. Automation in all applications requires controllable semiconductor switches to provide precise control. The increased usage of power electronic appliances in recent years has created great challenges in maintaining power quality standards. The conventional uncontrolled power converter used for energy conversion is the main cause of producing harmonics, mainly on the source side current. The suitable device to mitigate the current harmonics is a Shunt Active Power Filter. This paper proposes a new design for a three-phase filter that aims to reduce harmonics in source current under variable load conditions to enhance total harmonic distortion to the desired level. The filter is intended to operate in parallel with the load and source. It also employs a phase-locked loop for reference current computation in the synchronous reference frame theory control algorithm. The precision pulse width modulation method is used to provide a control signal to the voltage source inverter of the filter based on the dynamic conditions of the load to achieve the required level of harmonic compensation. The results obtained from the performance analysis of the filter through MATLAB simulations show that the value of total harmonic distortion is achieved as per the IEEE 519-2014 standards. The proposed filter is implemented in hardware to validate the results obtained from the simulation.