It is narrated from Sayyiduna Ibn Abbas (may Allah be pleased with them both), he said: Give a reply of salam to every Jew, Christian, and Magian, because Allah the Exalted has said: "When you are greeted with a greeting, respond with one better than it or return it in like manner." [سورہ النساء: 86]
Hadith Referenceالادب المفرد / كتاب أهل الكتاب / 1107
Hadith Gradingالألبانی:حسن
Hadith Takhrij«حسن : أخرجه ابن أبى شيبة : 25765 و ابن أبى الدنيا فى الصمت : 307 و ابن أبى حاتم فى تفسيره : 5729 و أبويعلي : 1527 - أنظر الصحيحة : 329/2»
Explanation & Benefits
Shaykh Maulana Usman Muneeb
Benefits and Issues: From this, it is understood that one should not initiate the greeting of salam to Jews and Christians. Similarly, the reply to the greeting of any disbeliever—whether he is a polytheist or from the People of the Book—should be given; however, it is sufficient to respond with "Wa 'alayk" (and upon you).
Source: Fadlullah al-Ahad: Urdu Commentary on al-Adab al-Mufrad, Page: 1107