ATC correct transponded altitudes for QNH - if they say your altitude reporting is out it will be - provided of course your altimeter is accurate and had the correct QNH set!
A KT76A does not have an altiidude encoder built in, and thus will be wired in to some sort of altitude encoder such as an AmeriKing. It is this latter unit that will require attention (assuming your altimeter is OK of course!)