The Modular multilevel converter (MMC) is most popular because of its high efficiency, flexibility, less harmonic distortion, usages of less power rating of the devices, high modularity and high scalability. In spite of these advantages, MMC faces many challenges such as voltages balancing and inner or circulating current control. The main goal is balancing the voltages across the capacitor in each submodule without excessive switching of the power electronic devices. So by using a controlled switching frequency technique in voltage balancing in MMC legs, the average switching frequency of the device is reduced. Because of switching actions and fluctuations in capacitor voltages results in even order harmonics in inner currents, in that second harmonic is dominating one. These harmonic components in current introduce large power losses, increase stress on power devices, and also may cause instability of the system. Traditional circulating current suppression methods have some limitations of harmonic rejection capability, complex implementation and computations. A modified sliding mode control is proposed for controlling both voltage balancing and circulating current control in this paper. This controller suppresses the harmonic components, particularly 2 nd harmonic in the inner current. For controlling the modular multilevel converter phase disposition PWM is used in this paper.This controller is implemented for single phase MMC which can be extended further for three phase system. The comparison results for conventional PI and SMC controller with modified SMC controller is presented. The results of proposed controller is validated through MATLAB/Simulink environment.