The increasing growth in the use of electronic equipment in recent years has resulted in a greater need to ensure that the line current harmonic content of any equipment connected to the ac mains is limited to meet regulatory standards. Shunt Active Power Filters (SAPF) are used to compensate both harmonic and reactive current component for the power supplies. It also improves the power quality and power factor on power utility. In this paper, Application of Direct Testing and Calculating Method (DTCM) in Shunt Active filters is proposed to estimate reference current signal, and apply hysteresis control to generate gate pulses. The results of simulation study of control scheme presented in this paper is found quite satisfactory for eliminate harmonics and reactive power components from utility, successful in meeting the IEEE 519 recommended harmonic standard limits.