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Harmonics generated by the nonlinear loads is a serious concern to the power system engineers as it adversely affects the power quality of the system. Recently, many findings focus on reducing the harmonics by introducing various topologies of the filter at the load end. This paper introduces a new concept of reducing current harmonics at the source side of induction motor using SAF in ANN controller. The vector control approach has been adopted for improving the dynamic performance of three phase induction motors. The voltage source inverter fed induction motor is considered as a nonlinear load. The mathematical model of three phase induction motor has been developed and the source current harmonics is reduced using PI and ANN controller. The hardware implementation of induction motor drive with shunt active filter on the supply side has been done. Also, the model is simulated using MATLAB/Simulink software and validated with the hardware results. Keywords: Artificial neural network, PI controller, Shunt active filter, Total harmonic distortion, Vector control of induction motor