In this paper, a reactive power compensation system using static VAR compensator is presented. To confine on system stability and reliability, the reactive power compensation is the fundamental way forflexible AC transmission systems (FACTS). The variations of reactive power have an effect on thegenerating units, lines, circuit breakers, transformers, relays, and isolators. It can also cause effective voltage sags and increase losses. In the proposed system, the lead time between voltage pulse and curren pulse is measured and fed to the interrupt pins of the microcontroller where the program takes over to bring the shunt capacitors to the circuit to get the reactive power compensated. Back-to-back SCRs interfaced through optical isolation from the microcontroller are used in parallel for controlling the capacitor.