This paper describes the effect of inverter output voltage harmonics to the reactive power of an induction motor. The major factors responsible for reactive power have been investigated by using PQ theory, proposed by Akagi. Induction motor equivalent circuit is used here to establish a general relation between these factors and voltage harmonics fed to the motor. By this way a relation is also formed between the voltage harmonics and reactive power. To validate the proposed relation, experimental work has been done with an induction motor fed by a sine PWM inverter. Here by changing switching frequency, different types of harmonics are injected into the motor and all the factors have been investigated and compared with the proposed relation. The reactive power has been calculated by using PQ theory and net reactive power calculation method, proposed by Budeanu. A very good accuracy has been obtained between the experimental results and proposed relation.