Here θ is the angle of wrap. Now the angle of wrap is different for larger pulley and smaller pulley in the belt drive. So which angle of wrap should be used in this equation?
TL;DR: use the angle on the driver/driving/primary pulley
It depends on which pulley is giving the motion. On a pulley you have a tight and a slack side.
figure 1: Slack and tight side smlease
On the slack side is $T_2$ and on the Tight side is $T_1$. The distribution is presented below:
Figure 2: Tension distribution -notice that the rotation is opposite to the image above - (source : tec-science)
So the angle should be taken on the driving(driver) pulley.
Note: the second diagram has a less than optimal configuration. It should be upside down. I.e. the slack side be on the top. The reason is that this improves the angle, and the overall traction of the belt on the pulley.
It depends on the product of angle of wrap (θ) and coefficient of friction (μ) of the corresponding pulley. Whichever product is less that angle of wrap is considered.
In case the coefficient of friction is same for both the pulleys in open-belt drive system, angle of wrap of the smaller pulley is usually considered.