In this work, a three-phase Shunt Active Power Filter (ShAPF) is proposed to address the current-related issues in a three-phase Electrical Distribution System (EDS). A Sliding Mode Controller (SMC) and an Enhanced Exponential Reaching Law-based SMC (EERL-SMC) are proposed for a ShAPF to compensate for the load current. The controller’s performance is tested by injecting the current harmonics into the system. A non-linear load along with different loads on the distribution side is connected in parallel in a distribution network at the point of common coupling (PCC). Modeling of the system is done using state-space analysis. The stability of the system is analyzed using the state feedback approach. The reference source currents are generated using the instantaneous PQ theory. For variations in the load, the THD in the source current is realized. It is found that EERL-SMC is more effective for a ShAPF in reducing the high-frequency oscillations and settling time for convergence. The source voltage and current waveforms are observed to be sinusoidal. Both controllers are effective in reducing the THD levels in the source current as per IEEE standards. A comparison between the controllers is presented in terms of settling time and THD in source current. PSCAD v4.6 is used for simulation works.