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Abstract:-Application of active power filters (APFs) towards the ever increasing problem of harmonic distortion in industrial power system, due to nonlinear loads, has become a reliable and flexible alternative. In this paper, a new method of harmonic current extraction based on charge balance principle, for shunt active power filter towards mitigation of harmonics and maintaining unity power factor both under steady state and transient operating conditions, is presented. This method involves simple mathematical calculations devoid of any iterative estimation process, so as to facilitate easy hardware implementation for industrial use. Finally simulation results for a comparative study between the proposed method and the popularly used Instantaneous PQ theory (IPQT) method is presented which reveals improved performance of the former with respect to performance, theoretical simplicity and required computation for improvement in power quality.