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The development of a new differential protection scheme for tapped transmission lines using wavelet transform is presented. At each relay locations, using the most suitable mother wavelet, the measured three line currents are decomposed up to third level. Thereafter, third-level approximation coefficients are reconstructed and used to derive the operating and restraining quantities. The proposed scheme has been tested extensively using the PSCAD/EMTDC software package with fault data, generated by modelling UKAI-KAKRAPAR 400 kV line of the Indian power system. The proposed scheme eliminates many of the problems encountered with tapped transmission lines such as high resistance faults, out feed current in case of internal and external faults, insufficient current for tripping and provides better discrimination between external and internal faults in case of loss of generation at one end. At the end, a comparative evaluation of the conventional current differential protection scheme with the proposed scheme is also presented. Dependability and security have been studied separately.