An embedded codec (EBC) circuitry includes encoder circuitry to determine a count of bits required to encode a plurality of quantized prediction residual levels in each sub-block of a plurality of sub-blocks of an image block, for a first coding scheme and a second coding scheme. The encoder circuitry allocates a bit value to a signaling bit for each sub-block of the plurality of sub-blocks, based on the determined count of bits. A value of the signaling bit represents either the first coding scheme or the second coding scheme. The encoder circuitry generates a bit-stream of the image block by selective application of either the first coding scheme or the second coding scheme on each sub-block of the plurality of sub-blocks, based on the value allocated to the signaling bit for each sub-block of the plurality of sub-blocks.