Conventional transmission line protection algorithms may experience delay or even mal‐operation in presence of shunt compensation due to various non‐fault transient disturbances. This paper presents a time‐domain differential protection technique based on Kullback–Leibler divergence with thresholding logic for mid‐point static synchronous compensator compensated transmission system. A detection index for each phase currents are computed in order to discrimination the fault and non‐fault scenarios. Different structure of power systems modelled using EMTDC/PSCAD are simulated to generate numerous numbers of test cases in order to evaluate the applicability of the proposed differential protection logic. Proposed method is also efficient to differentiate the faults during various non‐fault events like capacitor switching, sudden load change, power swing, and current transformer saturation including external fault cases. Results and comparative assessment with recently proposed time‐frequency and commercial current differential relaying reports demonstrate the efficacy and robustness of the proposed technique. The results confirmed the accurate operation of the proposed protection technique.