A method of significance group flag coding is disclosed. The method includes: receiving one or more significance group flags associated with a TU (transform unit), wherein the TU is divided into one or more sub-blocks; and coding said one or more significance group flags based on context set selection, wherein the context set selection is associated with significance map coding of the sub-block, and the context set selection depends on horizontal sub-block index, vertical sub-block index, or both the horizontal sub-block index and the vertical sub-block index.
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