[BUG] Pasted code displays without indentation, but is stored correctly

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

When pasting multi-line indented code into Claude Code, the displayed text in the terminal shows no indentation. However, the paste-cache file (~/.claude/paste-cache/) stores the code with correct indentation preserved.

This appears to be a display/rendering bug in how Claude Code echoes pasted input back to the terminal, not an input handling issue.

What Should Happen?

Pasted code should display with indentation preserved, matching what is stored in the paste-cache.

Error Messages/Logs

Steps to Reproduce

1. Copy this indented Python code:

for invoice in Invoice.objects.filter():
    checker = 0
    for invoice_heading in invoice.invoice_heading_set.all():
        checker += invoice_heading.net
    if checker != invoice.cost:
        print(f"Invoice: {invoice.id}")

1. Paste into Claude Code chat input
2. Observe: indentation is stripped in the displayed text
3. Check ~/.claude/paste-cache/ - the most recent .txt file has correct indentation

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.6

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

iTerm2

Additional Information

Isolation Test

Pasting into cat > /dev/null in the same terminal preserves indentation, confirming the terminal (iTerm2) is not stripping it.

Environment

• OS: macOS (Darwin 24.6.0)
• Terminal: iTerm2
• Login shell: fish
• Claude Code shell config: bash
• Claude Code version: 2.1.6

iTerm2 Settings Checked

• TrimWhitespaceOnCopy: False
• Terminal Type: xterm-256color
• No explicit BracketedPasteMode override (using default)
• No paste transformation rules