حَدَّثَنَا عَمْرُو بْنُ عَاصِمٍ، قَالَ: حَدَّثَنَا هَمَّامٌ، قَالَ: حَدَّثَنَا قَتَادَةُ، عَنْ أَنَسٍ قَالَ: مَرَّ يَهُودِيٌّ عَلَى النَّبِيِّ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ فَقَالَ: السَّامُ عَلَيْكُمْ، فَرَدَّ أَصْحَابُهُ السَّلاَمَ، فَقَالَ: ”قَالَ: السَّامُ عَلَيْكُمْ“، فَأُخِذَ الْيَهُودِيُّ فَاعْتَرَفَ، قَالَ: ”رُدُّوا عَلَيْهِ مَا قَالَ.“
It is narrated from Sayyiduna Anas (may Allah be pleased with him), he said that a Jew passed by the Prophet (peace and blessings be upon him) and said: «السام علیکم» (May death be upon you). The Companions replied to the greeting, so the Prophet (peace and blessings be upon him) said: "He has said «السام علیکم»." The Jew was caught and he admitted it. The Prophet (peace and blessings be upon him) said: "You should also reply to him in the same way."
Explanation & Benefits
Shaykh Maulana Usman Muneeb
Benefits and Issues:
The point is that initiating the greeting (salam) is impermissible; however, it is permissible to gesture or say things like “How are you?” etc. From another narration, it is understood that one should respond to the greetings of disbelievers with deliberation, and whatever they say should be returned to them in the same manner.
Source: Fadlullah al-Ahad: Urdu Commentary on al-Adab al-Mufrad, Page: 1105