A method for performing transform skip mode (TSM) in a video decoder is provided. A video decoder receives data from a bitstream to be decoded as a plurality of video pictures. The video decoder parses the bitstream for a first syntax element in a sequence parameter set (SPS) of a current sequence of video pictures. When the first syntax element indicates that transform skip mode is allowed for the current sequence of video pictures and when transform skip mode is used for a current block in a current picture of the current sequence, the video decoder reconstructs the current block by using quantized residual signals that are not transformed.