The balance of the share forfeiture account is shown in the balance sheet under the item:

Share capital

The correct answer is option 3- Share capital.

The balance of the share forfeiture account is shown in the balance sheet under the item Share capital.

The Share Forfeiture Account represents the amount received on shares that have been forfeited due to non-payment of call money by shareholders. Since the company retains the amount already paid on these shares, it’s not a liability or reserve. In the Balance Sheet (as per Schedule III of Companies Act, 2013), the balance in the Share Forfeiture Account is added to the Paid-Up Share Capital under the head "Share Capital". It is not shown under Reserves and Surplus, because it's not freely available for distribution. It is certainly not a liability or loan. For Example-
Share Capital:
Subscribed and fully paid-up: 10,00,000 (1,00,000 shares of ₹10 each)
Add: Share Forfeiture Account: ₹20,000
Total: ₹10,20,000