What is the formula of fiscal deficit?

The correct answer is option 3: Both are true

Both the formulae stands true for calculation of fiscal deficit.

Fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding borrowing.

Gross fiscal deficit = Total expenditure – (Revenue receipts + Non-debt creating capital receipts)

The fiscal deficit will have to be financed through borrowing. Thus, it indicates the total borrowing requirements of the government from all sources.

From the financing side,

Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad