This paper presents the extended version of the impedance source inverter (ZSI), which is recognized as a transformer integrated ZSI (Trans-ZSI). The configuration of Trans-ZSI consists of a ZSI, transformer and one capacitor. The designed Trans-ZSI has a small shoot-through duty ratio with fewer components. The suggested topology has the ability to balance the voltage at the point of common coupling (PCC) of the electrical distribution system (EDS) with the improvement of power quality (PQ) like enhanced voltage regulation, improvement in power factor (p.f), switching stress reduction and supply current distortion reduction. The operation of Trans-ZSI based distribution static compensator (DSTATCOM) performs reasonable shunt compensation. The principle operation of the Trans-ZSI is described in detail by mathematical analysis. Finally, the strength and effectiveness of the Trans-ZSI based DSTATCOM are verified by simulations using MATLAB/Simulink software. The comparative evaluations of ZSI with Trans-ZSI are presented in the literature to justify the advantages of the Trans-ZSI. The PQ issues mitigation comparisons are also performed considering the standard grid code (IEEE-2030-7-2017).