ABSTRACT: In recent years, the power quality of the ac system has become great concern due to the rapidly increased numbers of electronic equipment, power electronics and high voltage power system. Most of the commercial and industrial installation in the country has large electrical loads which are severally inductive in nature causing lagging power factor which gives heavy penalties to consumer by electricity board.This situation is taken care by Power factor correction device. Power factor correction is the capacity of absorbing the reactive power produced by a load. In case of fixed loads, this can be done manually by switching of capacitors, however in case of rapidly varying and scattered loads it becomes difficult to maintain a high power factor by manually switching on and off the capacitors in proportion to variation of load within an installation.The objective of this project is to measure the power factor from using PIC controller and trigger the capacitor bank by using a triac circuit in order to compensate reactive power and the power factor is improved.