A Reduced Resolution Update (RRU) coding tool is first adopted in Annex Q of the H.263 standard [1]. This method is to perform down-sampling process of the prediction error signal and up-sampling process of the down-sampled error signal using spatial domain filters. In order to improve coding efficiency and to reduce computational complexity, we introduce a RRU coding tool on transform domain. The RRU coding tool on transform domain uses an integer 8x8 transform kernel in H.264 standard by zero-out in the encoder with quantization offset and zero-appending in the decoder. Our proposed RRU coding tool does not need additional computations for the up-sampling process in the decoder and has equal or better coding efficiency compared to the previous RRU using spatial domain filtering.