VSCODE (v1.67) not using python.exe from virtual environment

[smithy49]

Hi,
When editing Python code I noticed 'env':venv in bottom right side of editor.
However when in the bash terminal and I type which python I see that the global python is selected and not the one in venv.
I installed a package from the terminal and it was installed in the global python folder.
When I open a terminal I see the below:

$ source J:/Envs/env/scripts/activate
(env)

Platform: Windows 10 - 21H1

Any help would be appreciated.