A processor implemented system and method for identification of an activity performed by a subject based on sensor data analysis is described herein. In an implementation, the method includes capturing movements of the subject in real-time using a sensing device. At least one action associated with the subject is ascertained from a predefined set of actions. From the predefined set of actions, a plurality of actions can collectively form at least one activity. The ascertaining is based on captured movements of the subject and at least one predefined action rule. The at least one action rule is based on context-free grammar (CFG) and is indicative of a sequence of actions for occurrence of the at least one activity. Further, a current activity performed by the subject is dynamically determined, based on the at least one action and an immediately preceding activity, using a non-deterministic push-down automata (NPDA) state machine.