Differential protection is generally provided for the equipment or group of equipments which are to be protected against internal faults. They are the primary protection systems (operates faster) for any internal faults occurring within the protection zone.
Under healthy conditions the currents at both ends of the windings will be equal. EMFs induced in the secondaries of the CTs will be equal and so no current flows through the operating coil of the relay. When an earth fault or phase to phase fault occurs the condition no longer holds good and the differential current flows through the relay operating coils makes the relay to operate. Relay operates for the faults occurring within the zone of protection.