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if we are seeking for internal protection of transformer only, then if any external fault occurs then it will show the fault though it should not. what a percentage differential protection will do means, it will include a restraining coil which is excited by the current in the transformer itself. Also the percentage differential relay ha taps. So it is easy to avoid the external fault. for reference check 'theory and applications of transformer differential protection' by GEORGE W.McKENNA, AIEE transactions 1950,volume 69

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