Limitations of differential protection of transformer: 1) Due to the magnetization characteristics of the CTs used, the ratio errors change with respect to the circulating currents. 2) The pilot wires used may vary in length due to which the unbalance in the secondary circuit parameter (resistance) is created that result in improper scheme. 3) During heavy short circuit conditions the high currents create saturation of the flux in core of CTs that lead to abnormal relaying or unexpected behavior of the relaying circuit. 4) Tap changing may lead to change in settings & improper operation. 5) Inrush of magnetizing current may lead to inadvertent operation & hence the settings are done for higher values of fault current (higher imbalance) due to which accuracy of sensing & operation is decreased.