Let the voltage source , transformers(generally) , be called 'T'.
Let the electric device (drawing current from the transformer) be called 'D'.
Now the domestic circuit is a closed circuit consisting of Live, neutral and earth wires.
Live wire ---> Carries current from T to D ---> around 200V(Different for different countries but close to 200 in many of them)
Neutral wire ----> carries current back from D to T ----> has to be ideally 0V but in reality there is a small voltage.
But when we begin at 'T' and algebraically add all potential drops till we get back to 'T', the sum is not 0 (it is around 200). The voltage is different when calculated from different paths -- 200 from 'T' to 'D' and 0 from 'D' to 'T'.
Isn't this against KVL? Besides the above statements would mean the breaking of law of conservation of energy. Does the earth wire have some role to play here? Please help me find the point I am missing.