This paper illustrates a differential protection technique for indirect symmetrical phase shifting transformer (ISPST) using wavelet transform (WT). Discrimination between internal fault and magnetizing inrush is developed based on time duration between time of disturbance and the first maximum peak, called Td in D4 frequency component of WT. The merit of the proposed algorithm is demonstrated for different internal fault and inrush conditions data generated by simulation using PSCAD/EMTDC and RSCAD/RTDS. It distinguishes internal fault with in quarter cycle.