1. A method for identification of an activity performed by a subject, the method comprising: capturing movements of the subject in real-time using a sensing device, wherein the movements comprises n skeleton frames of the subject, and wherein each of the n skeleton frames represents data of N skeleton joints of the subject; ascertaining, by a processor, at least one action associated with the subject from a predefined set of actions, a plurality of actions from the predefined set of actions collectively forming at least one activity, wherein the ascertaining is based on captured movements of the subject and at least one predefined action rule, the at least one predefined action rule being based on context-free grammar (CFG) and being indicative of a sequence of actions for occurrence of the at least one activity; determining, dynamically, by the processor, a current activity performed by the subject, based on the at least one action and an immediately preceding activity, using a non-deterministic push-down automata (NPDA) state machine, and wherein ascertaining, by the processor, the at least one action comprises: computing, by the processor, a covariance matrix of a feature matrix for the at least one action, wherein the feature matrix is based on joint coordinates of the N skeleton joints from each of the n skeleton frames for the action; identifying, by the processor, an error covariance matrix for the at least one action based on value of n, value of N, and value of variance of the joint coordinates of one of the N skeleton joints, wherein the error covariance matrix relates to noise present in the joint coordinates of the N skeleton joints of the subject; evaluating, by the processor, a noise-free covariance matrix for the at least one action based on the covariance matrix and the error covariance matrix; determining, by the processor, an active joint matrix for the at least one action based on an active joint threshold and the noise-free covariance matrix, wherein the active joint matrix represents a plurality of most active joint coordinates that uniquely identifies the at least one action; and identifying, by the processor, the at least one action, from amongst the plurality of known actions, based on the active joint matrix.