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This paper proposes a reduced voltage transformer based hybrid active power filter topology. It is a combination of two inverters with a split dc link voltage. The dc link voltage of the HFI is reduced by the transformer's turn ratio. Both the inverters are connected in shunt with the non linear load. The LFI provides a limited reactive power handling capability due to the high impedance in the shunt path however it provides excellent harmonic compensation at lower cost. MOSFET based switches are used in the HFI while IGBTs are used for the LFI. PWM based controller and hysteresis controller for operating the LFI and HFI respectively are used. The performance of the proposed topology and controller are simulated and observed in MATLAB/SIMULINK. The usefulness of the topology is confirmed by implementing it in an experimental setup.